National Service Framework for Children

Baroness Massey of Darwen: asked Her Majesty's Government:
	What progress is being made on the National Service Framework for Children.

Lord Warner: My Lords, this is the most complex of the national service frameworks to date, but good progress is being made. The first part of the National Service Framework for Children—Standards for Hospital Services—was published in April 2003. Work is now in hand to implement that standard. The Government will publish the full National Service Framework for Children before the end of the year.
	On 4 March, we published Every Child Matters: Next Steps, which sets out the first phase for implementing the Government's Green Paper on children with an important role for the national service framework in raising standards of care.

Baroness Massey of Darwen: My Lords, I thank the Minister for that very encouraging reply. How will the National Service Framework for Children impact on the White Paper on public health? Does he agree that issues of public health for children are very important, for example, in matters of diet, nutrition and obesity?

Lord Warner: My Lords, I agree with my noble friend about the importance of the links between the National Service Framework for Children and the White Paper on public health that my right honourable friend the Secretary of State launched in March as a major consultation exercise. The responses to that consultation exercise will feed into the White Paper and will inform the national service framework, a key part of which is to promote children's health and well-being.

Lord Clement-Jones: My Lords, the Mental Health Foundation recently highlighted the fact that some 50,000 children are on antidepressants and that the rates of suicide and self-harm among children have increased dramatically in the past 20 years. What focus will there be in the NSF on mental health services for children?

Lord Warner: My Lords, there are likely to be eight strands in the National Service Framework for Children, one of which will be child and adolescent mental health services. Perhaps I may remind the noble Lord that the Government are committed to improving child and adolescent mental health services, which will be backed up by significant additional funding of about £300 million in the three years to 2005–06, payable to local authorities and primary care trusts.

Lord Chan: My Lords, does the Minister agree that it is important for the National Service Framework for Children to get a good start? Could the Minister tell us what progress has been made in tackling health inequalities, particularly as regards reducing infant mortality and expectancy of life at time of birth?

Lord Warner: My Lords, the noble Lord is right. The Government have made a huge investment in improving neonatal care and £72 million is being invested in neonatal intensive care facilities. Perhaps I may remind the House and the noble Lord that it was this Government who started the Sure Start programme. There are now more than 500 of those programmes doing a great deal to help children and young people in very disadvantaged areas, which are covered by about 1,700 child centres.

Baroness Gardner of Parkes: My Lords, can the Minister assure us that children with disabilities, including physical disabilities—the Minister referred to mental health problems earlier—will be fully considered in the framework?

Lord Warner: My Lords, I am happy to reassure the noble Baroness that disabled children is one of the eight strands to be covered in the National Service Framework for Children.

Baroness David: My Lords, will the needs of children in special circumstances, such as refugees, looked-after children and children in secure provision, whose health outcomes are often the worst, be looked after in the national service framework?

Lord Warner: My Lords, I have a feeling that we shall work through the whole of the eight strands in the National Service Framework for Children. I am happy to reassure my noble friend that children in special circumstances of the kinds that she mentioned will be covered in the NSF.

Baroness Howe of Idlicote: My Lords, can the Minister tell us if the National Service Framework for Children will also have an impact on schools? Is that another strand? As the Government are seeking to join up services and locate many health and social care services in schools, surely it is crucial that the National Service Framework for Children should bite on education providers.

Lord Warner: My Lords, the Government have done a great deal to join together services that affect children and have appointed a Minister for Children. If the noble Baroness looks at Every Child Matters: Next Steps, she will see the way in which we are weaving together the strands of services for children. The National Service Framework for Children will do exactly that. There will be arrangements for integrated inspection of children's services.

Lord Elton: My Lords, the NSF will be a statement of intentions. What will be the mechanism for seeing that the intentions are completed?

Lord Warner: My Lords, the National Service Framework for Children is a 10-year strategy for delivering better health and social care for children. If the noble Lord looks at the other national service frameworks, he will see that there has been a strong emphasis on delivery. That is shown in the Government's record on improving death rates in relation to cancer and the reduction in coronary heart disease, both of which have a national service framework.

Baroness Howarth of Breckland: My Lords, the Minister mentioned the links with Every Child Matters: Next Steps. How are these links made with the five outcomes for children and young people?

Lord Warner: My Lords, the noble Baroness will have to wait for the detail in the national service framework, but the Government are integrating these different strands of work, and they will be covered in the national service framework when it is published.

Lord Harrison: My Lords, given the importance of joined-up questions, and joined-up government, what will the impact of the NSF be on the Children Bill?

Lord Warner: My Lords, the Government's position on the Children Bill will be explained fully by my noble friend at Second Reading tomorrow. The national service framework will be totally integrated and co-ordinated with the Children Bill when it is published.

Earl Howe: My Lords, the Minister will be aware that one in 10 young people are infected with chlamydia, and that in the past year alone there has been a 20 per cent increase in the number of people infected with HIV, which has prompted the Health Select Committee in another place to speak of a crisis in sexual health. Does he think that there should not only be a section in the children's NSF devoted to young people's sexual health, but that there is also a strong case for a separate national service framework on sexually transmitted diseases?

Lord Warner: My Lords, the National Service Framework for Children will be comprehensive in what it proposes in relation to improving integrated services for children. It will pull together information and expertise from a wide range of fields. In relation to the specific question asked by the noble Earl, a national strategy for sexual health and HIV was published by the Government in 2001, and large sums of extra money have been put in to modernise services and to tackle chlamydia, as well as a £4 million campaign on sex lottery, which is pitched at younger people.

Regulatory Impact Assessments

Viscount Goschen: asked Her Majesty's Government:
	Whether they believe that the regulatory impact assessment procedure is effective in ensuring that the benefits of regulation justify the costs.

Lord Bassam of Brighton: My Lords, Ministers sign off regulatory impact assessments to confirm that they are satisfied that the benefits of regulation, where it is necessary, justify the costs.

Viscount Goschen: My Lords, if the system is to be taken to be working well, could the Minister quantify the benefits that justify the more than £30 billion of regulatory costs that the British Chambers of Commerce calculates to have been imposed in the United Kingdom since 1997? If the Minister disputes the latter costing, could he give us his own?

Lord Bassam of Brighton: My Lords, welcome though the report British Chambers of Commerce Burdens Barometer was, some of the claims that it made were misleading. Some of the costs that were seen as red tape were actually the value of the policy to recipients, for example, the enhanced maternity rights for women, the minimum wage for 1.5 million workers, and better working conditions. Regulation is valuable. When the noble Lord was in government, no doubt he was the begetter of regulations. I could read out a long list of highly desirable regulations. We must look at the benefits of regulations as well as the costs. I am not able to provide a cost estimate, but the BCC cost assessment is somewhat wide of the mark.

Lord McNally: My Lords, would a greater deterrent to over-regulation be if Parliament had better scrutiny of regulation, not least in secondary legislation? So much of the over-regulation comes from Ministers using powers long after Parliament has passed the original Act. For example, the Licensing Bill that we passed for 24-hour licensing, has just had 198 pages of guidance notes published by the Home Office. Some of that guidance should have been closely scrutinised by Parliament, and there should be a reform that allows Parliament to look at secondary legislation much more thoroughly before Ministers use their powers under it.

Lord Bassam of Brighton: My Lords, I agree that Parliament is the place where regulations should be closely examined. Your Lordships' House does a fine job in that, through the Select Committee on Delegated Powers and Regulatory Reform. The Commons already has a regulatory reform committee. Your Lordships' House debates and considers in great detail those statutory instruments and orders that come before it. We do a good job in that respect, and I am intrigued by the noble Lord's example. I am sure that Members of your Lordships' House can think of many positive examples of regulations that they consider each and every day of the year.

Lord Peyton of Yeovil: My Lords, if the noble Lord was really satisfied with his Answer to my noble friend, I suggest that he has no grounds for it at all. It was about the most casual brush-off to an important Question that I have heard for a long time. My noble friend seeks to know whether the Government have any idea at all about the cost to themselves of their regulatory exercises, and, even more difficult, but more important, the cost to those who are obliged to obey and observe some of these absurd rules.

Lord Bassam of Brighton: My Lords, the whole purpose of the regulatory impact assessment process is to measure costs and benefits. It is not an easy task to quantify in the way in which the noble Lord suggests. In some ways, the British Chambers of Commerce report tells us that. Things that report sees as costs are actually, in some senses, savings, for example, the working time regulations, which the BCC report claims cost £11.1 billion. In fact, the assessment is that those regulations probably saved businesses somewhere in the region of £13 million. This business of costs and benefits is perhaps much more complex than the noble Lord would like to think.

Lord Glenarthur: My Lords, if, as the Minister said, these regulations are regularly scrutinised, can he say how many regulations have not been taken forward as a result of an adverse regulatory impact assessment?

Lord Bassam of Brighton: My Lords, I can give some examples of regulations that have not been taken forward as a consequence of an impact assessment. The United Kingdom was successful in convincing the European Commission to drop the proposal on emissions limits for vehicles following an RIA; after a consultation, the Government's powers to take control of financial markets following a terrorist attack were considered unworkable and would have undermined London's competitive advantage, and that regulation was dropped; and the recent changes to transfer pricing rules were heavily influenced by the regulatory impact assessment. Following a consultation on analysis and costs, it was considered that they would be disproportionate for small businesses and, as a result, small and medium-sized businesses were exempted. Those are three examples I can cite to the noble Lord.

Lord Haskel: My Lords, does my noble friend agree that many regulations today lay down not what people should or should not do, but the standards which a society such as ours should try to live up to?

Lord Bassam of Brighton: My Lords, my noble friend speaks a great deal of sense. That is exactly one of the purposes of regulation. It is also there to ensure fairness at work, better health and safety, the promotion of equality of opportunity, to tackle fraud and to improve maternity leave arrangements. Those are the kinds of matters that the vast majority of sensible regulations cover. I cannot believe that noble Lords opposite would want to argue with them.

Lord Cope of Berkeley: My Lords, given that some of the individual regulations may be desirable, does the Minister acknowledge that it is the cumulative weight of all the costs—the cost of taxation as well as the cost of regulation—that crushes small businesses? It is that cumulative weight that the Minister has refused to try even to evaluate in response to my noble friend's original Question.

Lord Bassam of Brighton: My Lords, it is perhaps worth taking a longer view on these matters. If you look at some of the independent evaluations of the regulatory regime in the United Kingdom you will discover that they believe Britain is the place in which to invest. The World Bank's Doing Business in 2004 publication named the United Kingdom among the top 10 countries, out of 130 countries, with the least regulation. That is a powerful endorsement from a major institution. While understandably concerned about regulation, I believe that noble Lords opposite too often forget its benefits.

Bovine Tuberculosis

Lord Livsey of Talgarth: asked Her Majesty's Government:
	What action they will take to eradicate bovine tuberculosis in the United Kingdom, in place of the present policy of containment of the disease.

Lord Whitty: My Lords, complete eradication of bovine TB is not likely to be achieved within the next 10 years using current control methods. The current public consultation on a revised TB strategy for Great Britain looks at what might be achieved in this timescale, potential control methods and the role of government and key stakeholders. Our priority in the shorter term is to prevent further spread of the disease.

Lord Livsey of Talgarth: My Lords, does the Minister agree that bovine TB has reached the stage where it has now become virtually impossible to contain? Is he aware that the estimated cost of compensation for infected animals is in excess of £50 million per year and that the disease is increasing by 19 per cent per annum? Does he agree with his right honourable friend Mr Nick Brown, the former Minister of Agriculture, who now believes that the disease must be eradicated? I speak as a sponsor of the original badger protection Bill. Does the Minister agree that badgers and cattle should now be treated equally and that diseased cattle and badgers should be eradicated, on an area by area basis, so that we have healthy badgers and healthy cattle and human health is not threatened?

Lord Whitty: My Lords, the noble Lord is correct to say that this is a very difficult animal disease—it is the largest threat facing us at the moment. In fact, help in containment of the disease and compensation for it cost £74 million last year. It is possible to slow down and, it is to be hoped, reverse the spread of the disease. There were severe setbacks during the foot and mouth epidemic but the backlog has since been overcome and the measures are at least containing the spread somewhat. Nevertheless, it is a very difficult situation.
	There are clearly a number of viewpoints in regard to badgers and we are currently still conducting scientific experiments to assess the effects of various forms of culling badgers in particular areas. We are about to receive the results of a review of that process which will inform future strategy.

Baroness Hayman: My Lords, has there been any progress in the search for an effective vaccine against bovine TB? Has there been any improvement in the situation that, I fear, existed when I was responsible for these matters, where every new incoming Minister was told that a vaccine was a decade away?

Lord Whitty: My Lords, we have expended some considerable effort on research into a vaccine, both for cattle and for badgers. The position is that there are various vaccines which would be appropriate for cattle but which would have side effects. However, even though there are more promising possibilities within that area, it will be a number of years—probably less than 10, but nevertheless a number of years—before we will have a general cattle vaccine. However, even though we may have an effective badger vaccine, the means of distributing it are a little hit and miss at the moment.

Baroness Byford: My Lords, is not the Minister slightly concerned about the vast increase in numbers? For example, the incidence of bovine TB in herds in the south-west of England has risen from more than 11,000 in 1994 to more than 19,000. The number of new herds infected has multiplied by three times and the total number of new incidents has multiplied by four times. I urge the Minister to push ahead because nothing is happening. What has been the response to the Central Science Laboratory's collection of badger carcasses? The project has been running since 1 June 2002: how many carcasses have been collected and how many were found to be infective?

Lord Whitty: My Lords, the noble Baroness is wrong to say that nothing is proving effective because the spread has slowed down; the backlog has been eliminated in terms of testing; and, at any given time over the past year, only 5.7 per cent of herds within the UK were affected by TB restrictions. Although there has been some spread of the disease, that indicates that one can exaggerate the problem. Nevertheless, although we wish to achieve the objective of eradicating the disease in the long term, it looks increasingly difficult to achieve within any given timescale. We are therefore concentrating on reducing the spread, restricting the amount of disease in the country and developing vaccines. To elaborate on my previous answer, we are spending £15 million a year at the moment in order to deliver an effective vaccine. As to the CSL trials, I do not have the exact numbers. I shall let the noble Baroness know. Clearly this is part of the scientific information that we are receiving in relation to our future strategy for badger culling.

Lord Hughes of Woodside: My Lords, as an innocent in these matters, and in a spirit of honest inquiry, how do we know the numbers of infected badgers? Are badgers collected and tested for the disease every three months, every six months or what? If, as suggested by the noble Lord, the disease is to be eradicated, is he suggesting that the only way to get rid of it is to eliminate every badger in the country?

Lord Whitty: My Lords, although badgers are one means of transmitting the disease, cattle movements and, to some extent, human movements may also contribute to its spread. Indeed, the spread from the south-west up the country tended to coincide with restocking following foot and mouth. So badgers are by no means the only method of transmission and there are biosecurity measures which can limit the access of badgers to herds. As far as concerns testing, the noble Baroness has already referred to one type, which is on carcasses found at the roadside and elsewhere. Within the areas where the scientific cull is taking place, the culled badgers are being continuously tested. The effects on the herds in those areas are part of the so-called Krebs trials assessment in which we are engaged. We hope that it will inform how we will deal with this process once we have the full results from the trials.

Draft European Constitution

Lord Howell of Guildford: asked Her Majesty's Government:
	What are the implications for the draft European constitution of the recent election result in Spain.

Baroness Symons of Vernham Dean: My Lords, the Government congratulate Mr Zapatero on his success in the Spanish elections and welcome his commitment to taking forward work on the constitutional treaty for the EU. The European Council agreed last week that negotiations on the new treaty should resume with a view to concluding no later than the next European Council in June. The noble Baroness, Lady Amos, will make a full Statement on this to the House later today.

Lord Howell of Guildford: My Lords, I thank the Minister for that reply. I realise that these matters will, to some degree, be covered in the Statement later. However, did the Minister note the Prime Minister's statement on Friday that, after the events in Spain, he is in favour of a quick agreement on the constitution and that the constitution is a good thing? Has she also noticed the excellent report about the European Court of Justice from this House's European Union Committee that confirmed that powers will be transferred to the Union by the draft constitution? That is contrary to what Ministers have claimed and asserted in recent months. How can the Prime Minister go on saying that that is a myth? How can he go on saying that it will be good to have this constitution when it means transferring powers to unaccountable central institutions? Can the Minister shed any light on the complete contradiction that confronts us now, quite apart from what will be said in the Statement later this afternoon?

Baroness Symons of Vernham Dean: My Lords, on the noble Lord's final point, I refer noble Lords to the 41st report of the European Union Committee, which states:
	"The draft Treaty makes plain the intention that the European Union remains a union of sovereign member states . . . It is clear that the balance of power is going to shift from the Commission to the Member States".
	That is what our own Peers have said. That is what we have discussed on a number of occasions. We have been over this issue. There may be differences of opinion but your Lordships' own peer group said something quite different.
	On the other point mentioned by the noble Lord, we look forward to a swift conclusion to the negotiations. The treaty is an important step forward. It spells out that the EU is a union of nation states. We believe that it reinforces the role of your Lordships' House and another place in ensuring that the EU legislates only where it can provide added value.

Lord Tomlinson: My Lords, does my noble friend agree that conferred competences are the basis of the draft treaty? It is very clear from the draft constitutional treaty that competences not explicitly transferred to the European Union remain with member states. Therefore, there is no transfer of sovereignty to be feared in this draft treaty that is comparable to the Single European Act passed by the previous administration.

Baroness Symons of Vernham Dean: My Lords, I emphatically agree. My noble friend Lord Tomlinson has spoken with his usual admirable common sense and I remind noble Lords that my noble friend is not alone in taking that view. I do not know many noble Lords are avid listeners to the "Today" programme. I listened to it on Saturday and was very pleased to hear the noble Lord, Lord Heseltine, say:
	"Why did Mrs Thatcher not have a referenda on the Single European Act?"
	He went on to say that it was:
	"far and away more significant in the surrender of British sovereignty than anything involved in the present constitution".
	It was not a noble Lord on my side of the House who said that but one of the cardinal figures on the other side of the House.

Lord Wallace of Saltaire: My Lords, we saw the eurosceptic press winding itself up to its usual hysteria at the weekend, as soon as it seemed likely that there will be an agreement by June. We have not yet heard any positive speeches by Ministers arguing the advantage to Britain of this further change in the treaty. May we anticipate that Ministers will be making the case loudly and clearly in weeks to come?

Baroness Symons of Vernham Dean: My Lords, I do not know many times I have stood at this Dispatch Box arguing the case over the draft treaty. We have said on a number of occasions that nothing in this draft treaty is agreed until everything is agreed. Noble Lords know that there is still a great deal of work to do. I shall not mislead noble Lords for a single instant about the importance and difficulty of the work that still faces the European Union on this point. The Irish Presidency's report to last week's European Council identified a number of issues that are unresolved. As noble Lords know, there are a number of issues that are enormously important to the United Kingdom Government.

Lord Willoughby de Broke: My Lords, what powers of scrutiny of the treaty will Parliament have? Will Parliament be able to change a single word of it, or will it have to be accepted or rejected whole?

Baroness Symons of Vernham Dean: My Lords, the noble Lord has been in this House long enough to know the answer to that question. Once the treaty is presented to your Lordships' House and to another place, that is the treaty on which your Lordships will decide. We cannot tinker with a treaty that has been agreed elsewhere. I think that the noble Lord really knew that when he rose to ask his question.

Lord Harrison: My Lords, is it not—

Lord Stoddart of Swindon: My Lords—

Baroness Amos: My Lords, I think that the House would like to hear from the noble Lord, Lord Harrison.

Lord Harrison: My Lords, is it not a fact that the proposed new constitution will enhance the powers of scrutiny of national parliaments?

Baroness Symons of Vernham Dean: My Lords, taken with my right honourable friend the Foreign Secretary's proposals on scrutiny, which I had the honour of repeating to your Lordships' House recently, there will be considerably enhanced powers of scrutiny by this House and by another place. I am sure that all noble Lords will take full advantage of that. At least, I hope that they will because in recent months when opportunities for discussion have been offered I have sometimes found noble Lords sadly absent from the meeting rooms.

Lord Renton: My Lords—

Business

Lord Grocott: My Lords, I am sorry to spoil the fun but we are back to Business. With permission, two Statements will be repeated this afternoon. The first will be on the European Council and update us on Libyan relations and will be repeated by my noble friend the Leader of the House. The second will be on serious and organised crime and will be repeated by my noble friend Lady Scotland.

Horserace Betting and Olympic Lottery Bill

Lord Grocott: My Lords, on behalf of my noble friend Lord McIntosh of Haringey, I beg to move the Motion standing in his name on the Order Paper.
	Moved, That it be an instruction to the Grand Committee to which the Horserace Betting and Olympic Lottery Bill has been committed that they consider the Bill in the following order:
	Clauses 1 to 10 Schedule 1, Clauses 11 to 13, Schedule 2, Clauses 14 to 16, Schedule 3, Clause 17 Schedule 4, Clauses 18 to 29, Schedule 5, Clauses 30 to 38, Schedule 6, Clauses 39 to 42.—(Lord Grocott.)

On Question, Motion agreed to.

Air Traffic Emissions Reduction Bill [HL]

Read a third time; an amendment (privilege) made; Bill passed, and sent to the Commons.

Energy Bill [HL]

Lord Whitty: My Lords, I beg to move that the Bill be now further considered on Report.
	Moved, That the Bill be further considered on Report.—(Lord Whitty.)

On Question, Motion agreed to.
	Clause 96 [Interpretation of Chapter 1 of Part 2]:
	[Amendments Nos. 189 and 190 not moved.]
	Clause 97 [Requirement to prepare decommissioning programmes]:

Baroness Byford: moved Amendment No. 190A:
	Page 79, line 28, at end insert—
	"( ) Where a consent is given under section 36 of the 1989 Act for the construction of a renewable energy installation in—
	(a) tidal waters and parts of the sea in or adjacent to Great Britain up to the seaward limits of the territorial sea; and
	(b) waters in a Renewable Energy Zone,
	the Secretary of State shall, before that consent is implemented, publish a program for the decommissioning of that installation."

Baroness Byford: My Lords, engineers, I am sure, are very capable and competent people. Considering the breadth and depth of their influence and the range of artefacts, buildings and huge constructions they have designed, it is amazing that there have been so few disasters. Unfortunately, when those disasters have occurred, they have tended to be memorable. One is aware of the Tay Bridge, the "Titanic" and the R101: all examples of cleverly engineered developments that worked perfectly well, until they came up against something unusual, not to say abnormal.
	Sea-based wind turbines are comparatively new. They stand up to their turbine tips in some of the most hostile water in Europe, and they have not yet been fully tested. Bearing in mind the predictions of rising seawater levels, stronger winds, and even more frequent storms, that testing may not be long delayed. Can the Minister say if there is to be a test to determine whether the pattern of installation affects how each turbine reacts to stress? What will happen if something large and solid strikes a turbine, particularly in a storm? Will the unexpected result in environmental damage, which will need to be swiftly removed or reversed?
	There is then the situation to be faced at the end of the turbine's life. This may occur at the expected time; it may occur sooner than that; it may be precipitated by new developments which render the wind turbines uneconomic. Whenever it occurs—by accident, by design, by competitive advantage—the ending of a turbine's life should be accompanied by a swift, uncluttered and complete removal of its constituent parts. These should then be recycled in whatever way is possible. None of them should be left in the sea or on the sea-bed.
	We are told that the DTI is proud of the decommissioning programme which works for other sea-bound structures. This may well be so, but it apparently has not been translated into law and, if a company were to move to the other side of the world or to go into liquidation, it might be difficult to pursue the matter. In Committee the Government stressed Article 60 of the UN Convention on the Law of the Sea. This article demands the removal of defunct structures to protect navigation, and further demands that the removal process honours the rights of other states and takes care of the marine environment.
	This will not content us, particularly as it may be that some of these structures will be put in areas where navigation is inadvisable, if not downright impossible. We believe that, before anyone constructs a wind turbine or a group of wind turbines—and we heard in Report last week that there may be up to 200 in one particular area—the Secretary of State should have a copy of the decommissioning plan. It may be that such a provision is already written into the Bill and that I have not seen it. If so, I apologise to the Minister. However, we believe that it should be as much a part of the construction process as the End of Life Vehicles Directive aims to be for car manufacture.
	Any installations or structures which are abandoned or disused should be removed to ensure the safety of navigation, taking into account any generally accepted international standards established in this regard by the competent international organisation. I understand that it is the view of the DTI that there is already a decommissioning programme for such installations, which it says is working well. As I have suggested, however, this is not set down in statute. We believe that putting it on the face of the Bill would ensure consistent application of these duties in the future. I beg to move.

Baroness Miller of Chilthorne Domer: My Lords, we moved this amendment in Committee. While supporting the spirit of what the noble Baroness, Lady Byford, says, in this rare instance we were satisfied with the Government's answer on the particular issue.

Lord Whitty: My Lords, I thank the noble Baroness, Lady Miller, for that. The first part of what the noble Baroness, Lady Byford, said related to the construction standards and the built-in standards as against any outside shock, which would be part of the original consent.
	As far as decommissioning is concerned, in serving a notice on a person to submit a decommissioning programme—which is covered by Clause 97(7)—the Secretary of State will have the power to direct a developer to consult interested parties. That involves everybody: shipping interests, conservation interests, the Environment Agency, and so forth.
	The Secretary of State will also have the discretion under those powers to require a developer to make such proposals public—on a website, for example—as part of a formal consultation process. On receipt of a draft decommissioning programme, the Secretary of State will need to have regard to the general requirements for decommissioning which will be set out in those regulations, but should also have the discretion to consult further, if she so decides. Once the programme has been approved, it would be the intention that developers would provide that information on their website for public inspection. There does not appear to be a problem in relation to this, as it is already common practice for the decommissioning of oil and gas installations.
	The Bill therefore already provides the powers for the Secretary of State to do what lies behind this amendment. As regards specifying more of the details—for example, if the noble Baroness suggests that the entire structure should always be taken away—it would depend on environmental factors and the science at that time. Clearly there is a decommissioning requirement at the beginning, which will be subject to consultation and, if necessary, the Secretary of State already has powers to extend that consultation to the decommissioning programme as such. I hope that the noble Baroness will, therefore, not feel it necessary to press this amendment.

Lord Jenkin of Roding: My Lords, I have listened carefully to what the noble Lord has said, but what happens if a developer, by the time you reach that point, is no longer solvent? What powers do the Government have to ensure that the provisions which the noble Lord has been describing will be written into the licence?

Lord Whitty: My Lords, they will have the powers to ensure that there is some security in place in relation to that; for example, if the company moved abroad. In the case of bankruptcy there may be a more complicated situation, particularly as we are talking of what would be a considerable time-scale. However, some security is provided.
	We will not be able to deal with all such risks, but neither can we do that in relation to oil and gas installations. By and large, we have found that the present regulations and the security provided in relation to those do work, have covered the cost of decommissioning and, where necessary, destruction.

Lord Peyton of Yeovil: My Lords, to what degree does the noble Lord find his own answer satisfactory, in terms of satisfying the point raised by my noble friends?

Lord Whitty: My Lords, it is as satisfying as it can be in the circumstances. We are talking about a long time-scale. Where a decommissioning programme is approved, its technology of decommissioning will of course change over the period of time; but the costs of decommissioning are, as far as is possible, built into the security provided at that time and into the contract and consent that are set up at that time. In a normal situation, I would have considered that to be pretty substantial security.

Baroness Byford: My Lords, I am not at all happy about that response. I am very grateful to my noble friends Lord Jenkin of Roding and Lord Peyton of Yeovil, because I find the Minister's answer somewhat disappointing. He said that in the Bill there is the power to consult everybody, and that they can use their discretion and have regard to such issues. There is, however, no laid-down imperative that these things should be concluded. I am very grateful to my noble friend Lord Jenkin of Roding for asking the question that I tried to pose: what happens if somebody is insolvent?
	I urge the Government to give this more thought. Before Third Reading, perhaps the Minister could write to me and place a copy of his letter in the Library, outlining the type of security that people will have to provide before receiving permission to develop these wind farms. That would be helpful. I am not at all happy with the response, and I shall return to the matter at Third Reading, but, at this stage, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Whitty: moved Amendment No. 190B:
	Before Clause 107, insert the following new clause—
	"DISCHARGE OF RENEWABLES OBLIGATION IN GREAT BRITAIN BY PAYMENT
	(1) In section 32(3) of the 1989 Act (renewables obligation), for the words from "must" to "produce" substitute "must, by each specified day, have produced".
	(2) In section 32C of that Act (payment as an alternative to complying with a renewables obligation), in subsection (1) for the words from "that" onwards substitute—
	"(a) that an electricity supplier may (in whole or in part) discharge its renewables obligation by making a payment to the Authority before the day specified as the day by which evidence must be produced for the purposes of section 32(3); and
	(b) that an electricity supplier's renewables obligation that was not discharged in whole or in part before the day so specified is to be treated as having been discharged to the extent specified in the order where the payment for which the order provides is made to the Authority before the end of such period beginning with that day as may be specified in the order."
	(3) In subsection (2) of that section (supplementary provisions of order providing for payments)—
	(a) after paragraph (a) insert—
	"(aa) for the sums that must be paid in order for an obligation to be treated as having been discharged to increase at a rate specified in the order for each day after the time by which evidence had to be produced for the purposes of section 32(3);"
	(b) in paragraph (b), for "such sums" substitute "sums or rates falling within paragraph (a) or (aa)";
	(c) in paragraph (c), after "sums" insert "or rates"; and
	(d) in paragraph (d), after "sum" insert "or rate".
	(4) After subsection (3) of that section insert—
	"(3A) An order under section 32 may, in the case of an electricity supplier's renewables obligation in relation to which provision is made by virtue of subsection (1)(b), provide that during the period—
	(a) beginning with the day specified for the production of evidence for the purposes of section 32(3), and
	(b) of such duration, or ending with such day, as may be specified in the order,
	no step under section 27A that is specified in the order shall be taken in respect of a contravention of that obligation (and section 27A shall have effect subject to provision made by virtue of this subsection)."
	(5) After subsection (5) of that section insert—
	"(6) References in this section to an electricity supplier's renewables obligation include references to its renewables obligation in relation to a particular period."
	(6) The requirements of section 32(7) of the 1989 Act (consultation before making an order) may be satisfied in the case of an order containing provision made by virtue of this section by consultation that took place wholly or partly before the commencement of this section."

Lord Whitty: My Lords, Amendment No. 190B seeks to take steps towards meeting the aim of reducing the likelihood of the impact of a future shortfall in the renewables obligation. In Grand Committee the Government agreed to consider a number of amendments that sought to deal with this problem. As I said at the time, I am grateful to noble Lords for the work they have done in preparing those amendments. I hope they will recognise that some of the concerns are addressed by this government amendment. We are under no illusion, however, that this would entirely remove the risk. With a market mechanism such as the renewables obligation, there is inevitably an element of risk as companies can and do fail. We need to achieve the right balance between reducing risk of a shortfall without placing undue additional burdens on consumers.
	Our amendment is very different from those which we discussed in Grand Committee, and it is somewhat complex. The amendment to Section 32(3) of the Electricity Act provides the power to reduce the length of the obligation period under the renewables obligation. As noble Lords will be aware, obligations are currently of a year's duration. Reducing the length of the obligation period reduces the size of the buy-out fund and, consequently, the effect of any shortfall.
	There are a number of complex issues to be addressed when considering shorter obligation periods. These include the length of the periods; the length of time after the end of the period before suppliers had to meet their obligations; and how suppliers' obligations could be assessed for shorter periods. These are detailed issues and there will be a statutory consultation exercise before amendment to the order can be made. We intend to do that this year. The amendment would therefore provide the necessary powers to introduce shorter obligation periods, but we would be informed by the outcome of that consultation.
	Before turning to the major thrust of the amendment, perhaps I should say a few words about netting off shortfalls in the buy-out fund against entitlements for recycled payments from that fund. The amendment does not address the issue of netting off in any direct sense. We have agreed to look at that, but we have been advised that we already have the necessary powers under existing legislation to enable us to make this change. I can assure your Lordships that we will be consulting later this year on amendments to the renewables obligation order to allow for netting off. However, we do not need a legislative change to do that, if indeed that is what emerges from the consultation. Indeed, it clearly will be a significant part of that consultation.
	Where our suppliers aim to meet their share of the obligations for a combination of ROCs and payment to the buy-out fund, and where their payments fall short for any reason—or where they aim to meet their obligation entirely through ROCs but for any reason should not have available sufficient ROCs—the first remedy will be netting off the shortfall against their entitlement for recycled payments. That is a sensible housekeeping measure that allows a more flexible approach to small shortfalls in provision.
	On late payments, the amendments to Section 32C of the Electricity Act would introduce a regime whereby suppliers who did not meet their share of the obligation in full would still be in breach of the obligation, but the breach could be remediable by making a late payment on which surcharges would be added. That builds on the order which was approved last week and which, among other things, enables Ofgem specifically to accept and disburse late payments into the new late payments fund.
	The amendment allows for the surcharges to increase for every day in which the payment is late. As noble Lords will recall, in Grand Committee I expressed some concern about the possibility of suppliers suffering double jeopardy. The amendment addresses this by specifying that the renewables obligation order may provide that no penalty under Section 27A of the Act can be imposed while the late payments regime applies. That should minimise the double jeopardy problem.
	The main aim of the amendment is to provide an incentive for suppliers to make any required payments into the buy-out fund on time. As noble Lords said in Grand Committee, it should be more expensive for electricity suppliers to make late payments to the buy-out fund than it should be for them to borrow from their banks.
	The amendment's second aim is to compensate suppliers who have provided ROCs and therefore demonstrated their commitment to increasing the contribution of renewables. It is these suppliers who suffer when there are shortfalls. It is therefore only right that these suppliers should receive compensation in the form of recycled surcharge payments from those who have paid their obligations late.
	As with all measures to address the issue of supply and shortfall there will be problems in specific cases. Applying surcharges to late payments will be effective only where the defaulting company has sufficient assets to pay both its obligation commitment and the surcharges which will be imposed.
	The amendment also provides for a period when late payments can be expected to come to an end. The reason for an end date is that, having specified that no enforcement action under Section 27A can be taken while the late regime is in operation, it is also important that there is a date when the late payment regime ends and the existing enforcement regime is resumed which would allow Ofgem to impose penalties for breaches of the obligation in the normal way.
	As with other issues concerning the securing of the buy-out fund, there are undoubtedly a number of detailed issues that will have to be resolved by secondary legislation. That includes, for example, the level of the surcharge and the duration of the period when surcharges are payable. Those issues will be addressed in the consultation, with the aim of these obligations coming into force on 1 April 2005.
	I am aware that the amendment does not address the issue of transferring liabilities with the obligation—or of keeping the obligation with the customers, to put it more simply. We agreed in Grand Committee to consider an amendment put forward by the noble Baroness, Lady Miller. We have done so. However, on further consideration, it has become clear that to take forward such an amendment would breach one of the fundamental principles of insolvency law; namely, that, generally speaking, if a company is insolvent, no unsecured creditor should be preferred at the expense of others. The amendment that the noble Baroness brought forward in Grand Committee would indeed have had the effect of taking a power to require the transfer of the failed supplier's renewable obligation commitment to the supplier who had taken on the customers.
	Not only does that conflict with the general approach to insolvency, if the power were exercised; it would also mean the buy-out fund would be paid in full and therefore other creditors would have lost out. The assets of the failed company would be worth less, as the assets would now come with the ROCs commitment, and the purchasers would therefore pay commensurately less for them. Hence there would be both a direct and an indirect effect on other unsecured creditors. So while the amendment may have appeared attractive at the time, it does conflict with these other principles of insolvency. We have concluded that it cannot be right for the buy-out fund to be treated more favourably than other unsecured creditors—for example, small businesses, those who supply to the company concerned, and so on.
	We have attempted to see if the same objective can be achieved by other means, but we have concluded that, again, it would have the effect of placing the fund in a preferential position compared with other creditors. We do not think that we could do that without disadvantaging those other creditors and breaching the principles of insolvency.
	Although I recognise that, particularly on the last point, this does not satisfactorily address all the concerns, I do not think there is a way of so doing without running into these other problems of organisations that may be in a contractual relationship or a non-contractual relationship with the supplier. However, I think the main point of the amendment addresses some of the problems arising from the possibility of shortfall on the renewables obligation. I beg to move.

Baroness Miller of Hendon: My Lords, I am grateful to the Minister for the points that he made in moving his amendment. He is right to say that he was aware that it would not go far enough to satisfy us, but we are always grateful for small mercies. With regard to the other matters that he brought up, we will leave those until the debate on Amendment No. 209ZA, which would be appropriate.

Lord Jenkin of Roding: My Lords, I am giving way to my noble friend who is leaving the Chamber. It has been clear from the start that the insolvency of a significant contributor to the buy-out fund will lead to a shortfall in the fund and therefore a reduction in the sum that will be available to those who wish to cash in their renewables obligation certificates. Although the measures that the noble Lord, Lord Whitty, has described to the House are aimed at trying to mitigate the implications of that, the fact remains that there will be, from time to time, as a result of an insolvency such as we faced with the company TXU, a reduction in the amount available to those entitled to benefit from payouts of the fund.
	In these circumstances the answer has to be that that has to be spread among consumers generally. It is far from clear that that will be the effect of what is happening. The effect will be to the disadvantage of those who invest in renewables and buy power from renewable generators—they will get less than they would otherwise have done. So the burden of an insolvency of, for instance, an ordinary generator from coal or gas will impact not on consumers as a whole but on those who invest in renewables.
	The Government have now faced one case, TXU, which had an immediate impact on the tradable value of the certificates, reducing them quite significantly and thereby disadvantaging the purpose of the renewables regime. Can the Minister give a figure for how much that deprived the renewable generators of what they would otherwise have received if TXU and the other small company had made the required payments? I am not sure that the Government have this right yet, because it impinges directly on their renewables objectives.

Lord Whitty: My Lords, the noble Lord rightly refers to the TXU situation. The full effect of that on the shortfall of the fund, which would in one sense therefore be spread across the other suppliers in the first instance, was £23.1 million and another £500,000 for the other maverick—the other small supplier. In that instance it applies to almost 20 per cent of the total fund. Clearly, in any such situation the initial effect of that will be to hit the other suppliers and adjustments will subsequently be made to their prices. It may well mean that the consumers make a contribution to it, but the noble Lord is undoubtedly right that that is inevitably the effect of the system and that the other suppliers will bear the initial brunt of such a bankruptcy and shortfall. We have to balance the requirement to secure the fund with the interests of the suppliers and their delivery of the renewables obligation and the interests of consumers.
	However, these amendments will make the situation of a shortfall less likely to arise or to arise at an earlier stage when the actual substantive effect would be less. But I am not pretending that it would not be there at all and that it would not have some of the consequences to which the noble Lord referred.

On Question, amendment agreed to.

Lord Triesman: moved Amendment No. 190C:
	Before Clause 107, insert the following new clause—
	"ISSUE OF GREEN CERTIFICATES IN GREAT BRITAIN
	(1) Section 32B of the 1989 Act (green certificates) is amended as follows.
	(2) In subsection (1), for "or to an electricity supplier" substitute ",to an electricity supplier or to a Northern Ireland supplier".
	(3) After that subsection insert—
	"(1A) A certificate is to certify either the matters within subsection (2) or the matters within subsection (2A)."
	(4) In subsection (2)—
	(a) for "A certificate is to certify" substitute "The matters within this subsection are";
	(b) in paragraph (a), after "an electricity supplier" insert "or to a Northern Ireland supplier".
	(5) After that subsection insert—
	"(2A) The matters within this subsection are—
	(a) that the generating station or, in the case of a certificate issued to an electricity supplier or to a Northern Ireland supplier, a generating station specified in the certificate, has generated from renewable sources the amount of electricity stated in the certificate;
	(b) that the generating station in question is not a generating station mentioned in Article 54(1) of the Energy (Northern Ireland) Order 2003; and
	(c) that the electricity has been supplied to customers in Northern Ireland.
	(2B) An order under section 32 must—
	(a) prohibit the issue of a certificate certifying matters within subsection (2A) where the Northern Ireland authority has notified the Authority that it is not satisfied that the electricity in question has been supplied to customers in Northern Ireland; and
	(b) require the revocation of such a certificate if the Northern Ireland authority so notifies the Authority at a time between the issue of the certificate and its production for the purposes of provision made by virtue of subsection (4)."
	(6) In subsection (3), after "Authority" insert "that certifies matters within subsection (2)".
	(7) After that subsection insert—
	"(4) An order under section 32 may provide that—
	(a) in such cases as may be specified in the order, and
	(b) subject to such conditions as may be so specified,
	an electricity supplier may (to the extent provided for in accordance with the order) discharge its renewables obligation (or its obligation in relation to a particular period) by the production to the Authority of a certificate that certifies matters within subsection (2A).
	(5) References in this section to the supply of electricity to customers in Northern Ireland shall be construed in accordance with the definition of 'supply' in Article 3 of the Electricity (Northern Ireland) Order 1992."
	(8) The requirements of section 32(7) of that Act (consultation before making an order) may be satisfied in the case of an order containing provision made by virtue of this section by consultation that took place wholly or partly before the commencement of this section."

Lord Triesman: My Lords, during the passage of the renewables obligation order through Parliament in 2002, the Government gave a commitment to consider the mutual recognition of renewables obligation certificates in Great Britain and Northern Ireland. There are now firm plans to implement a Northern Ireland renewables obligation on 1 April 2005. We have been working closely with Northern Ireland to set up the arrangements for the full tradability of certificates issued in Northern Ireland with those issued in Great Britain. That is important, as the relatively small size of the Northern Ireland electricity industry could not sustain a stand-alone market for ROCs.
	I now turn to the detail of the clauses on this issue. Existing clauses allow the supplier to count Northern Ireland renewables obligation certificates, NIROCs—another set of letters in this alphabet soup, pronounced "nirox"—towards its Great Britain obligation. They would permit Northern Ireland electricity suppliers who have discharged their obligation in Great Britain to be eligible for recycled buyout funds, and would allow GEMA to act on behalf of the Northern Ireland authority for electricity regulation in administering the Northern Ireland obligation.
	However, it has become apparent that these clauses are insufficient to deliver our policy intent of mutual recognition in full and the creation of a UK-wide market in ROCs, whether issued in Great Britain or Northern Ireland. Therefore we have tabled amendments designed to allow the completion of this policy intent.
	The amendments allow GEMA to issue ROCs to suppliers in Northern Ireland for some renewables electricity supplied in Northern Ireland and for those suppliers to discharge their obligation by presentation of these ROCs. It includes the issue of ROCs relating to the generation of GB electricity supplied in Northern Ireland.
	Amendment No. 191A is a minor drafting change and does not change the substance of Clause 107. Amendment No. 191B deletes subsection (2) of Clause 107. It is no longer required in the light of the other amendments. Amendment No. 191C allows the DETI's powers to amend Part 7 of the energy order to be extended to take account of the addition of Section 32BA. Amendment No. 191D amends Clause 108 to replace a reference to persons who are electricity suppliers within the meaning of Part 7 of the energy order with the defined term "Northern Ireland suppliers".
	We are keen to allow the full tradability of Great Britain ROCs and NIROCs from the outset of the introduction of the Northern Ireland obligation. These clauses will play an important part in that process and I commend them to the House. I beg to move.

On Question, amendment agreed to.

Baroness Miller of Hendon: moved Amendment No. 191:
	Before Clause 107, insert the following new clause—
	"ELECTRICITY TO BE EXEMPTED WHEN DETERMINING ELECTRICITY SUPPLIED
	In Section 32A of the 1989 Act, after subsection (1)(h), insert—
	"(i) that electricity generated by a generating station producing a heating or cooling effect in association with electricity shall not count towards the amount of electricity supplied by an electricity supplier that is subject to the obligation.""

Baroness Miller of Hendon: My Lords, in Grand Committee I introduced an amendment, together with my noble friends Lady Byford and Lord Jenkin of Roding, which was supported by the noble Lord, Lord Ezra. The amendment was intended to exempt combined heat and power from the renewables obligation. A further amendment tabled by noble friend Lady Byford, the noble Lord, Lord Ezra, and me required the Secretary of State to draw up a strategy for the encouragement of the development of CHP, and another amendment tabled by the noble Baroness, Lady Miller of Chilthorne Domer, further added to our proposal.
	Although these amendments—and especially the one requiring the Government to produce a timetable—were probing amendments, the response from the Government was disappointing to say the least. I will deal with that response in a few moments. However, in conjunction with my noble friend Lady Byford, the noble Lord, Lord Ezra, and the noble Baroness, Lady Miller of Chilthorne Domer, and—I stress this point—in consultation with the Combined Heat and Power Association, the present amendment has been tabled. It considerably modifies our original proposal and goes a substantial way towards meeting the Government's objections. We did not accept those objections as valid, but nevertheless this amendment goes some way to meeting them.
	I stress at once that the amendment does not classify CHP as renewable energy. However, CHP is a highly efficient means of reducing the United Kingdom's carbon emissions, strengthening our security of supply and improving the competitiveness of important sections of the British economy. CHP plants have much higher efficiencies—around 70 to 80 per cent—than conventional power stations, which operate at efficiencies of a little more than 40 per cent. It is CHP's efficiency gains that significantly lower the United Kingdom's carbon emissions, as I shall mention again later.
	The industry created a target to secure the much wider use of CHP when Michael Howard led the United Kingdom negotiations at the 1992 Earth Summit. The industry increased the target to achieve 5 gigawatts of CHP by 2000. When in opposition, the present Government committed themselves to double that target to 10 gigawatts by 2010. Last year's White Paper confirmed that target. The Government are woefully off course on achieving the targets set by the former government, let alone the more ambitious target that they set for themselves for CHP. Cambridge Econometrics recently reported to the Government that only between 7 and 8 gigawatts of capacity would be in place by 2010. That is 20 per cent less than what the Government say we shall need.
	The noble Lord, Lord Whitty, is the chief Minister responsible for CHP, and is fully aware of three indisputable facts. First, the new electricity trading arrangements—NETA—caused some CHP plant output to drop by 60 per cent almost overnight. Secondly, CHP capacity actually fell last year, for the first time since 1991. Thirdly, many existing CHP plants ran at only 50 per cent of their capacity.
	CHP is the primary carbon-reducing technology that supports British industry. It reduces energy costs and has a lower environmental impact. It thus makes our industry more competitive, and large-process plants such as refineries and chemical plants require more heat than power. That means that a CHP project could sell its excess power and, apart from the financial benefits, would add to the solution of our problem with security of supply. However, the Government's only support so far for CHP has been to exempt large industrial CHP plant from the climate change levy, but that took four years—from the Chancellor's announcement in 2000 until this January—to come fully into operation. That exemption's continued existence is not guaranteed beyond 2010, so there is no incentive for a new CHP project to be started today. It would take four years to come on stream, so it is possible to project only a minimal commercial value.
	A consequence of the Utilities Act—I hope that it was one of the unintended consequences—was to burden CHP plant with the cost of helping to meet the Government's overall renewable energy target. The Government's target for CHP of 10 gigawatts of electricity will cost the industry more than £60 million per annum by 2010. The extension of the renewables obligation to 2015 will further increase that burden. As I have said, what the Government have done, in effect by imposing a tax on CHP, is to make it cross-subsidise other low-carbon technology.
	In Committee on the Sustainable Energy Act 2003 in the other place, the Energy Minister said that the Government would,
	"consider proposals for an appropriate means of promoting CHP in line with our commitments in the energy White Paper".—[Official Report, Commons Standing Committee C, 24/6/03; col. 69.]
	We all know that the Government laboured long and hard in creating their White Paper, but they produced a veritable mouse that contains much more aspiration than inspiration. That is why, even as recently as Grand Committee, the noble Lord, Lord Whitty, said:
	"I readily accept that CHP can make a significant contribution towards energy management and reducing carbons".
	He said that, at present, the Government were not on target to meet their objectives for CHP, and that,
	"one could argue that CHP requires additional support to meet even the 2010 target".—[Official Report, 10/2/04; col. GC 528.]
	From the words of the well respected Minister, one could argue that CHP needs additional support. We on these Benches agree totally with him.
	What are the Government doing, however? They are refusing to treat CHP as carbon-efficient, and are taxing it as though it were as bad as the worst fossil-fuel power source operating. As I have pointed out, that has had disastrous effects on the whole industry and the potential of developing and exporting the new technology. It is also costing jobs, in an area where we should be thriving. We have had a White Paper and extensive consultation on the whole subject of energy. We have passed the Sustainable Energy Act, of which CHP could have been an element. We have this massive Bill before Parliament, but what did the Minister tell us in Committee? He said that,
	"we shall need to introduce a further CHP strategy very shortly".
	In the Government's annual report of 2003, they promised a CHP strategy to be published by the end of the financial year. The end of the financial year is 5 April, less than two weeks away. I am certain therefore that the Government have now made up their mind. I hope that the Minister would not disclose some vital state secret if he were to give us today a hint of what the decision might be. Why are even this Government vacillating over such an exceptionally important plank of their own energy policy? The answer may be found by reading between the lines of the fine print—I hope that noble Lords will forgive the mixed metaphor—of the Minister's speech in Grand Committee, when he said:
	"We need to ensure that the renewables target is met and not undermined by anything we do for CHP, which should not be considered in isolation".—[Official Report, 10/2/04; col. GC 528.]
	There we have it—a typical piece of creative book-keeping.
	I said at the beginning of my remarks that it is CHP's efficiency gains that significantly lower United Kingdom emissions. By treating CHP in the same way as the dirtiest coal-fired station, and then by lumping the two together in the same equation, the efficiency of one immediately reduces the liability of the other. What were the Minister's other arguments against—I use the word advisedly—the promotion of CHP, despite the lip service that he paid to it? He argued that including CHP in the renewables obligation was contrary to government policy, that measures to support CHP would weaken the commitment to renewables, and that CHP was largely based on fossil fuels and so merited less support anyway.
	It will not surprise noble Lords that the CHP industry did not take that attack on it lying down. It commissioned the leading energy consultancy, ILEX, whose credentials are that it was recently commissioned by the DTI itself on work concerning the renewables obligation. It found that: there will be a greater reduction in UK carbon emissions by excluding CHP from the base cost of the renewables obligation; the cost to the Government is negligible, and the proposal is easy to administer; the cost of reducing carbon in such a way is relatively cheap; the proposal will result in significant increases in output from existing CHP plant and in new development; and, contrary to what the Minister implied, there would be no adverse impact on renewable investment or ROC prices.
	Those findings have been duly presented to the DTI and Defra, the two departments that have the conduct of the Bill. Now that they have had the opportunity to consider them prior to today's sitting, I hope that they will agree that removing the cost burden from CHP is a relatively simple matter. No additional agencies or instruments would need to be created, because an effective audit trail for CHP already exists. There will be no additional cost to taxpayers, consumers or the Government.
	To be fair, as I hope that I always am, I have to inform your Lordships that this modest amendment does not enjoy unequivocal support from all parts of the generating industry. In an early brief, I was originally given to understand that the major companies driving forward the development of the United Kingdom renewables market, in collaboration with the Government, supported the amendment. However, in a brief that I and other noble Lords, as well as the Government—presumably—received after the amendment was tabled, I learned that although the Renewable Power Association agrees that CHP needs help—and that concession should be noted—it argues, nevertheless, that the amendment would damage the prospects of renewables.
	I shall not take up your Lordships' time by repeating the RPA's arguments in detail because your Lordships probably received them directly. However, it is my duty to respond as briefly as I can to its points. Its main argument is that the renewables obligation would instantly be reduced by the amount of electricity generated by CHP. In other words, it is argued—as I previously wrote before I received the RPA brief—that the other generators would have to work much harder to reach their targets. However, it is open to the Government to reduce any disadvantage that other renewables might incur by a few strokes of their pen, either by increasing the RO percentage or by increasing the base to which the percentage would be applied. Similarly, the Government could cap the amount of good quality CHP exports eligible to receive the exemption, although—it is to be hoped—that would still be at a realistic level that would maintain the economics of CHP.
	I believe that all parties in both Houses of Parliament, whatever their differences may be on the detail, are united in support of the Bill's general objectives. That includes support on these Benches for the means to reduce the United Kingdom's dependence on a high percentage of foreign fuel. It is not right that one trade association should be attacking another, when their common objective should be to protect Britain from the consequences of looming power shortages. I stress that noble Lords on these Benches do not support CHP at the expense of renewables. We unequivocally support both in all their forms, as long as they are viable, and I sincerely trust that the Government do, too. I beg to move.

Lord Ezra: My Lords, I support the amendment, which was moved so ably by the noble Baroness, Lady Miller of Hendon. This issue emerged in Grand Committee, much was said about it and the noble Baroness has fully answered the critique that has been made that it could be costly to the renewables sector. In fact, as the ILEX report showed in great detail, that would not be the case if the proposals in the amendment were adopted. What is worrying is that although the Government and, indeed, everyone else fully accept the contribution that combined heat and power could make to the reduction in carbon emissions, so far those objectives have not been achieved. They are not yet at the target level that was set for the year 2000 and the prospect, on the basis of present policies, of achieving the 2010 target of 10 gigawatts remain remote.
	CHP capacity for the past three years has remained unchanged while generation from that capacity has fallen. So urgent action is required if the Government are to do what they set out in the energy White Paper regarding CHP. We realise that the Government will publish a further report on CHP before long, but we do not know when that will be and we do not know what positive steps will be proposed.
	We propose one measure that will immediately offer some alleviation and change the current feeling within the CHP sector. We strongly recommend that the Government adopt our amendment. I was involved in the lengthy debate on the Utilities Bill and it was certainly not our opinion that, arising out of that Bill, CHP would be discriminated against in the way proposed by the Government and treated on the same level—as the noble Baroness argued—as other sectors that emit far more CO2. There is not the slightest doubt on these Benches that this is a desirable amendment which goes some way to start a move towards more CHP operations by, at least, making fuller use of existing capacity and introducing additional capacity that would be required if the Government's objectives are to be achieved.

Lord Jenkin of Roding: My Lords, I, too, support the amendment. I do so following the noble Lord, Lord Ezra, who for some years was one of the few voices in this Chamber who consistently argued for the expansion of combined heat and power. My noble friend Lady Miller of Hendon has made a compelling case, to which I hope the Minister will listen.
	I shall make one central point. When the White Paper was published last year it was widely interpreted as having set out a new approach to a low carbon energy policy. Indeed, in paragraph 1.18 of that White Paper, under the heading:
	"The goals of our new energy policy",
	the first goal, printed in bold, was,
	"to put ourselves on a path to cut the UK's carbon dioxide emissions—the main contributor to global warming—by some 60 per cent by about 2050".
	When the Royal Commission published that figure there was much scepticism, but that target has become a central plank of the Government's aspirations—I use that word because we recognise that they cannot be more than that at this stage. There it is—the first goal is to reduce CO2 emissions.
	The next page contains the proposals for how that will be achieved. Under the heading,
	"How we will achieve our goals"—
	that is, the goal of reducing carbon emissions—paragraph 1.29 states:
	"We believe it is possible to achieve this goal by reducing the amount of energy we consume, together with"—
	these are the key words—
	"a substantial increase in renewable energy".
	So, there is the goal—the end, as it were—of reducing carbon dioxide, and the means: the increase in renewables. As my noble friend Lady Miller said, sight has been lost of the ends and the means have now become the primary target. They have become the goal. CHP is a technology that can achieve a marked increase in energy efficiency, by either reducing emissions for the same amount of output or increasing output with no increase in emissions; but receives no support. I shall weary the House by quoting, yet again, the words of the noble Lord, Lord Whitty, in Grand Committee:
	"We need to ensure that the renewables target is met and not undermined by anything that we do to CHP".—[Official Report, 10/2/04; col. GC 528.]
	That position stands the policy on its head. The means have become the ends—and there are other such examples that will be considered later—where a perfectly satisfactory and proven way of reducing carbon dioxide and the CO2 equivalent is being denied the help that it deserves in order to save the Government's face as they head towards their targets for wind power.
	What has happened? The CHPA made an interesting statement that capacity in CHP fell last year for the first time since 1991. That sits alongside an announcement from Defra, the noble Lord's own department, last week on 25 March, which said:
	"Statistics published today by Defra show that carbon dioxide emissions increased by 1.5 per cent during 2003".
	What could be madder than that? My noble friend called it "creative book keeping", but, with great respect to her, it is much worse than that: it is standing the policy on its head, confusing the ends with the means and ensuring that the Government will not achieve their first goal, which I quoted from the White Paper; namely, the reduction of CO2.
	It is nonsense to refuse to support CHP in order not to blunt the incentive for windmills, but that is what the Government are doing and why I support my noble friend's amendment. I hope that she will press it to a Division.

Lord Peyton of Yeovil: My Lords, I too support my noble friend's amendment. I admire her persistence, eloquence and vigour and the way that she has sustained those qualities having gone through the anaesthetic experience of proceedings in Grand Committee in the Moses Room. I do not know how your Lordships can summon the patience to go through that dreary business when the Committee's teeth are removed and you are told at the beginning that you have no power to amend the Bill but that you must go through it and discuss it and take what pleasure, enjoyment or satisfaction you can from government explanations.
	I have some sympathy with the noble Lord, Lord Whitty. I cannot understand why he instead of the Department of Trade and Industry has been saddled with this Bill. I thought that energy was subject to the DTI. I regarded the White Paper as a product of the DTI and I cannot for the life of me understand why the DTI is not here to answer for it. The explanation that occurs to me is the natural inborn coyness of the Secretary of State, who probably knows awfully little about electricity and does not care much about security of supply; perhaps she will be out of office when the penalties arrive.
	The Government, particularly the DTI, have a sort of yearning. In case the Minister is under any misapprehension, I must tell him that my admiration, respect and regard for the DTI is extremely limited. It seems to suffer from the ambition of wishing to tell people what to do while at the same time taking little responsibility.
	The Government and Ofgem have materially and substantially reorganised or been responsible for the reorganisation of the electricity market in our country. In the course of doing so they have reshaped it. The investment target of 10 gigawatts by 2010, which they accepted in their White Paper, has been rendered impossible to achieve. In the past two years, my understanding is that 2.7 million gigawatts have been put on hold, with the result that that target has become virtually unattainable, so the future security of supply has been jeopardised.
	I do not understand how the Government have allowed such an important subject to be buried in the DTI, which is responsible for many other matters. As a result, they have put this vital matter into jeopardy. I hope that the Government will accept the powerful arguments of my noble friends Lady Miller and Lord Jenkin and the noble Lord, Lord Ezra, so that they show at least a gleam of sense in wishing to go in the direction which they stated in the White Paper.

Baroness Miller of Chilthorne Domer: My Lords, I am pleased to have my name to the amendment. Nothing is more important than cutting our carbon dioxide emissions. The Government's chief scientist says how important that is in counteracting climate change, which he views as the greatest threat.
	We have heard that not only have the Government failed in their target but carbon emissions have increased by 1.5 per cent. In response, the Environment Minister Mr Elliot Morley said on Thursday that the Government would be reviewing UK climate change programme measures and policies to try to introduce new measures and policies so that climate change might be tackled more effectively. By writing this amendment into the Bill we will help the Government to do just that.

Lord Whitty: My Lords, I am grateful for some important speeches, not least from the noble Baroness, Lady Miller of Hendon, and the noble Lord, Lord Ezra, who has long been an advocate on the matter. I turn first to the intervention of the noble Lord, Lord Peyton, which was also enlightening but shows us that there is a misapprehension on the part of the Opposition Benches—he is not the only one to suggest it.
	The energy White Paper, the Bill and our energy policies as a whole are a product of the whole Government. Nothing is buried, as he put it, in one department. We are all party to these policies and that is why we present them across government as a whole: the DTI, Defra, the Treasury and everyone else is engaged in their delivery.
	CHP is an area that can clearly make major contributions towards a lower carbon economy. That is why the Government have set a target for it and supported it in a number of ways set out in the energy White Paper and since, fiscally in terms of support and the Government's commitment for their own estate and so forth.
	The achievement of the Government's strategy on energy requires us to deliver on CHP and renewables. We cannot trade one against the other. The noble Lord, Lord Jenkin, argues that we should not maintain the renewables target at the expense of CHP and accuses us of doing the opposite. But both are necessary.

Lord Jenkin of Roding: My Lords, I do not know whether the noble Lord was asleep at that point, because I never said anything of the sort. I was quoting him as saying that he could not give help to CHP because he saw it as a threat to renewables.

Lord Whitty: My Lords, exactly. The logical conclusion is that the noble Lord would prefer us to adopt a policy in relation to CHP that undermined the target on renewables. I am saying to the House that we should do both. We have a target to meet our objectives for renewables and a target to meet our objectives in relation to CHP. I agree to a large extent with the noble Baroness, Lady Miller, that we need to redouble our efforts in support of CHP and that we need to ensure that we deliver the target of 10 gigawatts of CHP by 2010—not to the extent that she implied, but we are short of meeting that target at the moment. She is undoubtedly right that there has been some serious setback to the momentum on CHP, but the latest estimates suggest that even on current policies and current price matters we would be delivering about 8.5 gigawatts of CHP by 2010 and therefore the gap is achievable. Provided that we can focus support for CHP, we intend to deliver 10GW of CHP in line with our target.
	CHP is not, as a result of the renewables obligation, discriminated against. Every form of power generation must meet the renewables obligation, whether it is coal, oil, gas nuclear or CHP. It is not discriminated against.
	The noble Baroness has half an argument on the initial stages of the NETA proceedings, which probably disadvantaged CHP to some extent in terms of the supplier to the National Grid. However, that has been rectified by Ofgem so, that apparent discrimination has been removed.
	The noble Baroness is wrong to say that the ILEX report says that it would have no effect on the ROCs' structure. In fact, it says that the effect on ROCs prices, and therefore the proper operation of the market in that area, will be about 5 per cent. We consider that it might be somewhat larger, but 5 per cent is a significant effect on the ROCs market. Indeed, it is almost the equivalent effect created by the TXU shortfall, to which the noble Lord, Lord Jenkin, rightly drew our attention on the previous amendment. If it has an effect of that magnitude, surely we should take it seriously. The fact of the matter is that CHP, although a hugely more efficient form of fossil fuel, is a fossil fuel. It is therefore odd to take it in a way that undermines the achievement of the renewables obligation.
	In closing, the noble Baroness referred to the views of another trade association. The only way in which the amendment could stack up would be to increase the size of the renewables obligation to compensate for the effect which the removal of the CHP from that obligation would cause. That is not in the amendment before us. It is more logical, but it would impose an effect on the rest of consumers and industry. The noble Baroness also referred to the cost of achieving the renewables obligation more generally.
	The noble Baroness, Lady Miller, the noble Lord, Lord Ezra, and others referred to the strategy on CHP. We will bring together into the CHP strategy all the measures in support of CHP through the fiscal process and any new measures. I can assure the noble Lord, Lord Ezra, that it will slip a little from 1 April, but will be in place immediately after Easter. Therefore, the degree of government support for CHP will be clear.
	While I am deeply sympathetic with the need to support CHP, the amendment has serious problems which undermine the renewables obligation and thereby the achievement of the carbons target. We should not be favouring one means of achieving—and we are talking about means—by acting detrimentally towards another. We need CHP and renewables in order to meet what we have set out in the energy White Paper. This amendment would distort that achievement and does not of itself contain rectifying measures to offset that negative effect. I therefore consider that we should not go down this road.

Baroness Miller of Hendon: My Lords, I listened carefully to what the Minister said. He said that in part he agreed with me but he clearly did not agree with me enough. I therefore intend to test the opinion of the House.

On Question, Whether the said amendment (No. 191) shall be agreed to?
	Their Lordships divided: Contents, 138; Not-Contents, 118.

Resolved in the affirmative, and amendment agreed to accordingly.

European Council and Libya

Baroness Amos: My Lords, with permission, I shall now repeat a Statement made in another place by my right honourable friend the Prime Minister. The Statement is as follows:
	"With permission, Mr Speaker, I shall make a Statement about the European Council which I attended in Brussels on 25 and 26 March. I should like to pay tribute to the excellent organisation and chairmanship of the Irish presidency and of the Taoiseach, Bertie Ahern, in particular.
	"We met in the aftermath of the bomb attacks in Spain. We expressed our sympathy and solidarity with the Government and people of Spain. Co-operation in the fight against terrorism in Europe was stepped up after September 11 with the establishment of joint investigation teams, the freezing of terrorists' assets, the establishment of the European arrest warrant and a number of measures of co-operation with the United States and other countries. But we recognise that not nearly enough has been done especially on implementation of agreements, the provision of information to Europol and co-operation with third countries.
	"At this European Council we have set deadlines for the implementation of EU measures. We set out further measures on counter-terrorist legislation in all member states, confiscation of crime-related proceeds, creating a comprehensive database of forensic material, strengthening border controls, better intelligence sharing, transport security and a number of other matters listed in the text that we adopted at the Council. We have appointed a single person to co-ordinate the Union's work in this area and are establishing a new counter-terrorism intelligence assessment cell, so that we will have the means of assessing intelligence, combined with effective police co-operation through Europol and co-operation among prosecuting authorities via Eurojust.
	"I briefed my colleagues in the European Council on my visit earlier, on 25 March, to Libya. I made clear to Colonel Gaddafi our support for Libya's decision to abandon voluntarily its WMD programmes, and our welcome for the full and transparent co-operation which Libya had subsequently given.
	"Libya's actions in the past have caused grief and pain to many individuals and families, which we cannot forget. I raised Lockerbie and WPC Fletcher with Colonel Gaddafi, stressing the importance of the forthcoming visit to Libya by the Metropolitan Police team investigating WPC Fletcher's murder. We shall stay in close touch with the families in both cases. But if change in Libya is real, we should support it. It is the beginning of a process and we should take it step by step. But I believe that a Libya free of WMD and with no links to terrorism is overwhelmingly in our interest and that it is right to pursue this dialogue, and we will.
	"What has happened over the last few weeks has reinforced the determination of all member Governments in Europe to equip a Union of 25 member states to be able to operate efficiently and effectively. As honourable Members will see from the conclusions, the Council took substantive decisions on growth, employment, research and development and on how to equip our citizens with the education, training and access to lifelong learning which are vital if Europe is to maintain its competitive edge.
	"But it is already clear that in a Europe of 25 and then of 28, decision-making cannot remain as it is. The result would be paralysis of Europe and an inability to make progress in vital areas of co-operation that are emphatically in the British national interest. We need to be better able to set priorities, pass simpler laws, and have a completely different system for the day-to-day running of the European Union. That includes governments setting the strategic direction in the European Council with a full-time chairman of the Council, chosen by governments, to take forward their programme.
	"In almost every field—job creation, sustainable development, the environment and the fight against terrorism, illegal immigration and organised crime—we need to work together as one in the European Union. That is what the constitutional treaty is about, and we shall seek to negotiate it to a successful conclusion under the Irish presidency. Britain will ensure that we keep control over our tax and social security systems, over the future of the UK abatement, over our own criminal justice system and over defence and foreign policy, as we have said we would. Provided that we do so, this treaty is right for Europe and right for Britain because, in today's world, particularly after the events of recent months, Europe needs to work more effectively to protect and enhance the lives of our people.
	"The European Council gave its continued strong support to the efforts of the UN Secretary-General to bring about a comprehensive settlement of the Cyprus problem. This is a historic opportunity to end the long division of the island and we urge all the parties to seize it.
	"The European Council welcomed the recent positive political developments in Iraq and the UN Secretary-General's acceptance of the Iraqi Governing Council's invitation to help. It condemned, however, the recent terrorist attacks in Iraq, which have had as their aim maximising civilian casualties. The European Council also expressed grave concern over the situation in the Middle East.
	"The European Council strongly condemned the recent ethnically motivated violence in Kosovo. All leaders locally must now take responsibility for the situation to ensure there is no repetition.
	"By negotiating within the European Union we have succeeded in establishing common policies to deal with terrorism, crime and illegal immigration. We are taking forward a programme of economic reform, long overdue. We have a common European stance to deal with the challenge of climate change. Last year in the context of the WTO negotiations we achieved the biggest ever reform of the common agricultural policy; not enough but a substantial step forward. We are developing a common foreign and security policy to tackle the common global threats we face. Our security, stability and prosperity depend upon our successful membership of the European Union. Under this Government, it will not be put at risk".
	My Lords, that concludes the Statement.

Lord Strathclyde: My Lords, I thank the noble Baroness the Leader of the House for repeating this important Statement. I join her in again expressing the sense of outrage that the whole House feels about the barbaric atrocity in Madrid and in associating this House with the sentiments voiced by all European leaders.
	It is good to voice abhorrence of terrorism. Words help. But it is also necessary to act. The noble Baroness knows that we on these Benches strongly support the stand taken by the Prime Minister against terrorism. He was right to associate himself so closely with President Bush after 11 September; right to support international action in Afghanistan; and right to take a lead in the removal of Saddam Hussein. So long as he holds firm, he can expect our support.
	But when will we see similar firmness on these issues in every European capital? The Prime Minister has forged a strong alliance with Mr Berlusconi—they are clearly of a like mind on these issues. But did President Chirac and Herr Schroeder give any new commitments to join actively in the war on terrorism? And, while understanding the agony of Spain, are the Government worried over what many saw as a signal of weakness to Al'Qaeda from the new Spanish Government? Spain is now talking about removing troops from Iraq: did any other EU countries offer to send troops in their place?
	We note the undertaking over closer European co-operation on security. But, given frankly varying standards of security in different member states, will the noble Baroness assure the House that no information will be shared with any other country that might jeopardise our security or that of our Armed Forces, or which might imperil the crucial security co-operation between this country and the United States?
	What was the reaction in Brussels to the Prime Minster's report on his summit with Mr Gaddafi? Did the Prime Minister in his meeting with Mr Gaddafi persuade Libya to break ties with Mr Mugabe and the vicious Government of Zimbabwe? Were any concrete new steps pressed by the Prime Minister against Mugabe and his henchmen? Were any agreed? Was there a discussion of the role of Libya in the civil wars in west Africa, which are a matter of such great humanitarian concern to all in the EU?
	Not long ago the House was told that the prospect of a new constitution for the EU had receded. Now it seems Paris and Berlin are back in the driving seat.
	The Prime Minister himself once agreed that there was no need for a constitution. At the start of this process he said the British way for Europe was not a,
	"single, legally binding document called a Constitution".
	Why does he now support a constitution which would give the EU many of the attributes and trappings of statehood—a new president, a foreign minister and a new legal status—and one in which, as our EU Committee said in the conclusion of its most recent report on the future role of the European Court of Justice:
	"In a number of respects the powers of the Union would be increased"?
	At Question Time it appeared that the noble Baroness, Lady Symons, had not read the report. I hope that the noble Baroness the Leader of the House will have an opportunity to study its conclusions in due course.
	The Prime Minister once agreed that the constitution was not essential for enlargement. In December he said:
	"This is not constitutionally necessary in order for enlargement to take place".
	Now he says that it is essential for enlargement. What made him change his mind?
	Can the noble Baroness give any indication of when the next draft of the constitution will be published, and an indication of the timings? Assuming that the constitution is signed in June, when will the Government seek to ratify it—presumably in the form of legislation? Will they hope to publish that Bill of ratification soon after the June summit?
	The events preceding this summit point to the acute dangers that stalk the international scene. For us on this side of the House they underline the crucial importance of this country's links with the United States, and make all the intrigues over a new EU constitution look insular and hopelessly short of the call of the hour.
	What Europe surely needs now is a unity and common resolve against real and imminent external dangers. Should not every nation of Europe first help defeat terrorism, before courting further divisions over ill conceived new treaties? I hope that the Prime Minister will continue to hold out for that common-sense order of priorities. But if he does not succeed—or if, red lines or no, he turns into an advocate of a new EU constitution—then surely the Leader of the House must agree that the Prime Minister must carry the British people with him.
	Several other governments have already given their citizens a promise of a referendum. The constitution will decide how this country is governed. This is a Government who have already held 34 referendums so far, but on this historic issue the Prime Minister refuses the British people a say.
	Along with many Labour Members of Parliament such as Frank Field and Gisela Stuart, I believe that any proposal for a new constitution must be put to the British people. At least seven other member states of the EU are giving their people a say; the British people must have a say too. Why did the Prime Minister not tell his colleagues in Brussels what others of them told him: that his country could not ratify a new EU constitution without a test of the settled will of the British people in a referendum?
	The Prime Minister tells us to trust him. On this side of the House we say trust the people.

Baroness Williams of Crosby: My Lords, we on these Benches congratulate the Irish presidency on finding a very effective way of taking the position forward following a change of mind by Spain and Poland. This has again opened up the possibility of reaching a constitutional agreement by June.
	Secondly, we strongly support the Prime Minister. A constitution would clarify the relationship between the member states of the Union and the Union's institutions. It would make things a great deal simpler, and go a long way in dealing with some of the murky areas of suspicion that surround the EU. It would also enable those of us who would like to see an honest and open debate to deal with the buzz of propaganda that creates an extraordinary picture in the British media of what the European Union is, and what a constitution would do. A large number of people in this country are greatly mislead by this.
	We also congratulate the Prime Minister on his meeting with Colonel Gaddafi. Colonel Gaddafi may be, at best, a returned prodigal son, but the Prime Minster is surely right in saying that we need to pursue the possibility of diplomatic and peaceful methods to bring countries that are potentially very dangerous within the structure of international law.
	We congratulate the Prime Minister on a courageous act, but I would like to add a word of warning. There was some discussion about possible arms deals. I hope that they will be closely limited to such brilliant deals for buying anti-mine equipment that Sir Richard Branson is now apparently developing. That is the kind of arms deal that we would like to see; as for other kinds—surely not at the present time.
	I thank the Leader of the House for repeating the Statement. The most disappointing thing about it is that there is a great deal in the presidency's conclusions that the Statement does not reflect. I shall touch on two or three issues raised in the presidency conclusions, enquire whether the Leader of the House has any comment to make, and ask why they have not been touched on in the Statement, as they are of great importance.
	The first issue concerns the stability pact. It is time for governments, including strongly pro-European ones, to say clearly that the rules of the EU must apply to everybody, not just some and not others depending on the size of the country concerned.
	Secondly, the presidency conclusions make rather charming reference to Russia and congratulate President Putin,
	"on his stated commitment to the freedom of the media".
	What does that mean? Is it not right and proper that an EU profoundly committed to democratic practice and human rights should say clearly that Russia must address the issue of the increasingly narrow approach to freedom of the media, if she is to be considered a future partner of the European Union—I do not say a future member, but even a future partner?
	Thirdly, I am sorry that the Statement does not reflect the reference in the presidency conclusions to the singular importance of the Kyoto agreement. There is half a sentence in the Statement; there are several paragraphs in the presidency conclusions. Again, in the interests of clarity and courage, should we not say that one reason that the Kyoto settlement is in such difficulty is the opposition, including the lobbying for further opposition, of the United States? Europeans should surely have the guts to say that to their closest ally.
	Lastly, it would have been helpful if the Statement had mentioned whether there is a real chance of uniting Cyprus, with only three days left before the Secretary-General's deadline becomes real. I ask the Leader of the House to comment on that.
	Let us say from these Benches loud and clear that we have been waiting for years now to campaign on the true facts of the European Union. We have campaigned for this House and this country to take rather more pride in the remarkable achievements of that Union, not least in uniting Europe for the first time in a century or more. I hope that the Government will now start campaigning firmly on the truth, the real facts about the European Union and not be endlessly put off by some of the extraordinary propaganda that passes for information in some sections of our press.

Baroness Amos: My Lords, I thank the noble Lord, Lord Strathclyde, and the noble Baroness, Lady Williams, for their opening comments. I shall seek to address the specific issues raised.
	I agree totally with the noble Lord, Lord Strathclyde, in his support for the very strong stand that my right honourable friend the Prime Minister has taken on terrorism. That is reflected in EU leaders' discussions on the counter-terrorism agenda. I am sure that the noble Lord will be pleased to know that they agreed a declaration that demonstrates a robust response by the whole EU to the Madrid attacks. The noble Lord may have read the declaration; it gives tight deadlines for the implementation of existing EU measures; identifies periods for further co-operation, for example, transport and border security; moves the European Union towards identifying and addressing those third countries failing to combat terrorism sufficiently; and agrees the appointment of a counter-terrorism co-ordinator in the Council secretariat.
	The noble Lord, Lord Strathclyde, mentioned, in particular, Spain and the announcement by the new Spanish Prime Minister. The noble Lord will be aware that it was made absolutely clear that that withdrawal depends on the position of the United Nations. It would therefore be wrong for us to pre-empt Spain's decision.
	The noble Baroness, Lady Williams, welcomed my right honourable friend's visit to Libya. Zimbabwe was discussed. It was made clear that Libya and the UK should stay in touch on the issue. My right honourable friend was very firm about the differences that we had with Zimbabwe and the need for the Libyans and Colonel Gaddafi to understand that. There has been continuing dialogue with the Libyans on the wider issue of west Africa. For example, while I was the Minister responsible for Africa, I engaged in dialogue with the then Libyan Minister for Africa, looking specifically at Libyan involvement in the continent as a whole.
	On the question of a constitution, and why now, we have made absolutely clear that the treaty is an important step forward. It spells out that the EU is a body of nation states that has only those powers that governments choose to confer on it. The noble Lord, Lord Strathclyde, is well aware that one of the reasons that it is so important is that, if we are to have an effective Union of 25, we must look at ways of streamlining the measures within the European Union so that 25 can operate effectively.
	Two different House of Lords committees have reported on the issue. One committee makes absolutely clear its view that the Union's powers are not being increased, but greater powers are going to member states and their parliaments. The Government will respond to the more recent report in due course.
	On the question of when another draft will be published, the noble Lord will know that the commitment made at the European Council meeting was that there should be agreement by the Council in June. The Irish have gone back to look at a timetable to achieve that.
	On the question of a referendum, members of the Conservative party have voted consistently against referenda on these matters. The noble Lord, Lord Heseltine, said in a Radio 4 interview on Saturday morning,
	"this is what Parliaments exist for. Why did Mrs Thatcher not have a referendum on the single European Act,"—
	the noble Baroness is not in her place; she was here earlier—
	"far and away more significant in the surrender of British sovereignty than anything involved in the present constitution? It never occurred to her to have a referendum".
	That is because, under our constitutional arrangements, Parliament makes the law. It is interesting that suddenly the Conservative party wants that to change.
	In certain circumstances, Parliament has decided that particular laws should come into operation only after a referendum has been held. In practice—I repeat, in practice—they have been held where there is a wholly new constitutional structure proposed. That is not the case in this instance, and we have made that absolutely clear time and again.
	The noble Lord, Lord Strathclyde, asked me why we would not trust the British people. We have trusted them, and they have delivered two major election victories for this Government. The noble Lord may well ask himself why he does not trust Parliament, given that it has a strong role to play in the process.
	I shall now respond to the points raised by the noble Baroness, Lady Williams of Crosby. On Kyoto the noble Baroness is quite right: the opposition of the United States has a big role to play. We, and others, have sought to talk to our US colleagues about the importance of the Kyoto Protocol. The noble Baroness will be aware that my right honourable friend the Prime Minister has made it clear that, in our presidency of the G8 next year, climate change and Africa will be the two issues at the top of our agenda. We have a commitment to raise the awareness of the British people and to campaign on these issues. My right honourable friend has made that clear. He again made it clear in the way that he responded to questions on the Statement this afternoon.
	As regards the prospects for a Cyprus settlement by 1 May, the noble Baroness is right. There is not a huge amount of time. However, as the European Council has concluded, this is an historic opportunity to bring about a comprehensive settlement to the Cyprus problem. Kofi Annan is in Switzerland leading the talks. The Prime Ministers of Greece and Turkey are closely involved. The results of these negotiations will be put to referenda in late April. So there is a chance for all the people of Cyprus to decide the future of their island and for a united Cyprus to join the European Union.
	On the noble Baroness's final point on the stability pact, it was made clear in the conclusions of the European Council that the economic reform agenda remains a key plank. We need to inject a greater momentum into that process. But European leaders and countries remain committed to that economic reform agenda.

Lord Tomlinson: My Lords, first, I thank my noble friend for repeating the Statement made in another place by my right honourable friend the Prime Minister.
	Perhaps I may begin by welcoming the appointment of Mr Gijs de Vries as the counter-terrorist co-ordinator. He has done splendid jobs as the Dutch Minister for European Affairs in the European Parliament and a representative of the Dutch Government in the convention. His appointment is widely to be welcomed, as well as the role.
	On a referendum, looking closely at the words that my right honourable friend the Prime Minister used, I believe that the only circumstance in which a referendum would be justified would be if any of the areas of tax and social security systems, the future of the UK rebate, our own criminal justice system or defence and foreign policy were to be subjects over which we no longer had control. They would be significant changes. However, as the Prime Minister said, provided we safeguard those the treaty is right for Europe and right for Britain. Will my noble friend accept from me that the combined forces of herself and the noble Lord, Lord Heseltine, are vastly preferable to the somewhat siren voice of the noble Lord, Lord Strathclyde?
	Like the noble Baroness, Lady Williams, I wish to refer to what is in the presidency conclusions but not the Statement. One matter which concerns me seriously is that this Council meeting was meant to be taking stock of the Lisbon process. The first item is the Lisbon process priorities. The language of the presidency communique is ambiguous. On the one hand it refers to the picture being mixed and states that,
	"the pace of reform needs to be significantly stepped up if the 2010 targets are to be achieved".
	However, it then states:
	"The message from the European Council is one of determination and confidence".
	If there is so much determination and confidence, can my noble friend tell the House why it has been necessary also to appoint Mr Wim Kok to carry out a study on progress? As we reach half time in the Lisbon process agenda, we do not seem to be anywhere near half way as regards the results.

Baroness Amos: My Lords, I share my noble friend's welcome of the appointment of the counter-terrorist co-ordinator. Because concerns have been expressed, it is important to say that at the European Council the economic reform agenda was overshadowed by the issue of terrorism and discussions on the IGC. Because of the common goals and good co-operation which already exist between member states on these issues, we had already nearly agreed final conclusions on this matter before Friday's discussions. It would be wrong for noble Lords to go away with the idea that this was not an important part of the agenda.
	Heads of state and government of the 25 current and acceding member states made a commitment to take concrete steps to boost Europe's competitiveness in line with the Lisbon strategy for employment and economic reform. It was agreed to intensify measures to raise employment and growth across Europe; to deliver commitments to tackle red tape and boost enterprise and innovation; to hold a hard-hitting review of progress in meeting our strategic goal of making Europe the most competitive and dynamic knowledge-based economy in the world—on my noble friend's point about meeting the half-way point next year, that review will be critical—and to call on the next president of the Commission to make the competitiveness and economic reform agenda a top priority for action.
	There is a recognition that we need to step up the pace. I think that the agreements made at the European Council will help that to happen.

Lord Maclennan of Rogart: My Lords, will the Minister recognise that the description of the proposed constitutional treaty by the noble Lord, Lord Strathclyde, as "ill conceived" could scarcely be worse chosen: that the treaty in draft has emanated from the deliberations of a convention set up by the existing and future members of the Union at a time of very great international danger; that the essential need for Europe is not only to be able to speak with one voice but also to be able to act with firm determination to curb terrorism; and that we strongly welcome the outcome of this conference which has demonstrated a willingness to reach agreement on the rules of the game and to take action in setting up Mr Gijs de Vries in his role as counter-terrorist co-ordinator?
	While the views expressed about referenda differ widely, will the process not be described as more characteristic of the constitution of the Swiss confederation than of the United Kingdom's way of reaching decisions? Although there may be occasions when it is important to have referenda when considerable transfers of sovereign powers are at stake, either from Westminster to the constituent parts of the United Kingdom or from Westminster to some international organisation, this treaty in its current draft form scarcely conforms to those precedents.

Baroness Amos: My Lords, I agree strongly with the noble Lord's comments about the draft treaty, the existing and future members of the convention, and the conclusions of member states with regard to acting with firm determination on issues relating to counter-terrorism.
	On his second point on referenda, the noble Lord is right. Only one UK-wide referendum has ever been held. That was in 1975 on whether the UK should stay in or withdraw from the European Union. Noble Lords are aware that the present Government are committed to holding a referendum on the euro. Referenda have never been held to approve changes to the existing institutions of which we are members. That is the situation that we confront today.

Lord Hannay of Chiswick: My Lords, does the noble Baroness accept my congratulations to the Prime Minister on his visit to Tripoli in the same terms as those offered by the noble Baroness, Lady Williams? Does she not agree that one of the most interesting and encouraging aspects of the visit was the way in which it responded to Colonel Gaddafi's surrender of his nuclear, chemical and biological capabilities? In anyone's book, surely that is a step in the right direction of reinforcing collective security. It is extraordinarily unusual.
	A few years ago, we could have imagined Colonel Gaddafi surrendering the two men who were indicted to stand trial, but could we seriously have supposed that he would be shipping large quantities of weapons material out to the United States? I rather doubt it. Rather than concentrating on the trivia, such as the colour of the tent and the number of camels that were galloping around, it would be useful if we, and the press, could focus on things that really matter.
	On Cyprus, I, too, should like to applaud the line taken by the European Council, its support for Kofi Annan's efforts and its determination to accommodate any settlement that Kofi Annan puts forward. That is crucially important. Does the noble Baroness not agree that if, alas, it becomes necessary to move to the third stage where Kofi Annan bridges the gaps because it has not been possible to reach agreement between the two parties and Greece and Turkey, and takes them up on their commitment to put that to a referendum, it would be incomprehensible if anyone concerned, particularly the leaders of a future member state of the European Union—that applies to Turkey and Cyprus—were to do other than to campaign for a "yes" vote in the referendum?
	On the constitutional agreement, since the 1970s every British Government have questioned whether to take more decisions in Brussels and whether they should be taken by a qualified majority vote, which should be decided on the criterion of whether it was in Britain's interests to do so. Despite that, is it not strange that it appears that there is a new doctrine which says that the taking of decisions in Brussels, the taking of new decisions by a qualified majority, is ipso facto a bad thing just because that change is being made, irrespective of whether it is in this country's interest or not?
	I should like to echo the plea made by the noble Baroness, Lady Williams. The Government should now step up their explanatory statements on what is in the constitutional agreement and why it is in Britain's interests to go ahead with it as long as our vital interests are protected in the negotiations. It is rather sad to see people claiming that there has not been such a change in Britain since the 17th century. I fear that that is a commentary on the teaching of history in British schools: in this case, I assume it is the private schools rather than the public sector. It is bizarre that quite a lot that happened in the 18th, 19th and 20th centuries and any understanding of the relative importance of the various treaties on which the European Union is based should be ignored.

Baroness Amos: My Lords, the noble Lord, Lord Hannay, is right in his statement about Libya and the importance of concentrating on the things that matter. The result of UK and US engagement is that Libya, within a few weeks, has dismantled its nuclear programme, begun destroying its chemical weapons and is now working in full co-operation with the international community.
	We all know that we cannot make the world a less dangerous place by engaging only with friends. We have to engage with countries where there are differences. Sometimes that is difficult. But it was absolutely right for my right honourable friend the Prime Minister to visit. We still have a long way to go on certain issues, but we are moving in the right direction.
	Having been the special representative, the noble Lord, Lord Hannay, knows a great deal more about Cyprus than I do. On the back of the work that is being done by Kofi Annan, it is absolutely right that both sides will need to work with their citizens to campaign for a positive outcome to these negotiations. We all hope to see that, although the timescale is somewhat short.
	The noble Lord, Lord Hannay, made a plea echoing that made by the noble Baroness, Lady Williams of Crosby, for us to continue to campaign on this issue with respect to the EU constitution and stressed the importance to Britain's interests of doing so. I entirely agree with the noble Lord. We shall continue to do that.

Lord Howell of Guildford: My Lords, are we to understand from the noble Baroness's reply to my noble friend Lord Strathclyde and from a reply from the noble Baroness, Lady Symons, earlier today that Ministers have not yet read the very good and important report from our European Union Committee, entitled, The Future Role of the European Court of Justice? The report states:
	"In a number of respects the powers of the Union would be increased".
	That is about the draft constitution. It also pointed out that a new legal order would be created and that the ECJ would become the supreme arbiter of this country's powers.
	Those are fundamental changes that totally refute what Ministers have been asserting. Indeed, they call in question what Ministers have been inaccurately quoting from a previous very good EU Committee report. If there is to be a serious debate, it is very important that accurate and not misleading statements are made by Ministers. Therefore, perhaps I may ask the Minister to read the report carefully before she or her ministerial friends repeat the utterly misleading quotations that we heard today, which were taken inaccurately from previous House of Lords European Union Committee reports. They bring into disrepute our hard work and excellent reports, which should be treated with more seriousness than appears to be the case.

Baroness Amos: My Lords, the noble Lord, Lord Howell, is wrong. I made it absolutely clear that there were two reports. In my response to the noble Lord, Lord Strathclyde, I made it clear that the Government would respond in due course to the report, which I have in front of me and which I have seen, on the ECJ. We have seen the report, which raises issues of primacy, the CFSP, the ECJ jurisdiction and access to justice. The report does not come down definitively on some of those issues.
	On primacy, the report asks for more clarity on the impact of Article 10(1).

Lord Stoddart of Swindon: My Lords, is the noble Baroness aware that not only does the Conservative Party and the Liberal Democrat Party want a referendum on the very important matter of the constitution but a growing number of Labour Members of Parliament are also in favour of a referendum, as are more than 80 per cent of the people of this country, according to various opinion polls?
	At Question Time today, the noble Baroness, Lady Symons, stated that ratification of the European constitution would be the same as for all previous treaties. In other words, Parliament will not be able to make any amendments to the constitution. Does the Minister not agree that in this case that would be a constitutional outrage? Parliament will not be able to amend the provisions of a new constitution that the noble Baroness has just outlined as having serious implications for this country. Parliament—the House of Commons and this House—will not be able to amend the provisions as they would any other Bill that came before this House.
	I hope that the noble Baroness will be able to deny that that is the way the Government will behave over this very important constitutional change to the way in which this country will be governed.

Baroness Amos: My Lords, the noble Lord, Lord Stoddart, will not be surprised to know that I do not agree with him. This is not a constitutional outrage. We have made it clear that a treaty that increases the EU's accountability, strengthens the role of parliaments in European business, while preserving unanimity in key areas of policy, would be in this country's interests. The ratification process will be the same as for all previous treaties, as my noble friend Lady Symons set out this afternoon.

Earl Russell: My Lords, since the noble Lord, Lord Hannay, has introduced the teaching of history, I draw the noble Baroness's attention to the fact that this is the 400th anniversary of the union of England and Scotland. That, like the EU, was a union of two sovereign states under a common authority. The King believed, I quote the Lord Privy Seal, that, "this meant that decision-making could not continue as it had been".
	That view did not find favour in the English House of Commons, where one particularly prominent Member said that this called for a special consultation of the people. That does not necessarily mean a referendum, but it means something remarkably like it. The result was that nothing was decided. If we look at the case of McCormick v Lord Advocate in 1953, a lot of the key questions were not decided in 1707 either. The relations between England and Scotland were not put on a settled legal basis until the parliamentary Session 1998–99. That caused a great deal of grief to all parties. Let us not make the same mistake twice.

Baroness Amos: My Lords, it is always a pleasure to listen to the noble Earl and to receive a lesson in history, as we have this afternoon. We are absolutely clear that if a Union of 25 is to operate effectively, we need to bring about some change. That is what this process is about. It is an important process, which will make the European Union more efficient and effective working as a Union of 25 rather than 15.

Serious and Organised Crime

Baroness Scotland of Asthal: My Lords, with the leave of the House, I shall now repeat a Statement made in another place by my right honourable friend the Home Secretary. The Statement is as follows:
	"With permission Mr Speaker, I wish to make a Statement on our strategy to tackle organised crime. Although crime has fallen, there remains a very substantial challenge to turn round those aspects of criminality that threaten the very fabric of our society. The success of the police and other law enforcement agencies should not lead to complacency. We know that there is a great deal that now needs to be done to tackle specific areas of criminality, including organised crime.
	"Organised crime is big business. It costs us up to £40 billion a year. Its effects are corrosive. It corrupts society and spreads fear and intimidation. Organised crime operates across frontiers and reaches into every neighbourhood, especially some of the most deprived parts of our country. Lives are destroyed by drugs, smuggling and prostitution. It is a major contributor to low-level crime, abuse and exploitation.
	"Organised crime exploits every technique of modern technology, It uses identity theft, Internet and modern security communications. Such criminals employ many of the same methods as those who run terrorist networks. Indeed, the evidence is clear that many terrorists seek to finance their activities through organised crime.
	"This means that now more than ever we need to make a step change in our response. So we are setting a clear objective: year on year reduction in the harm organised crime causes the United Kingdom and its citizens. We will make the UK one of the most difficult environments in the world for organised crime. We will work closely with our partners to undermine its international effects. Today's White Paper sets out our strategy to achieve these goals. We will create a powerful new agency—the Serious Organised Crime Agency. We will take new powers to disrupt activity and convict those responsible, and we will enhance our capability to stay one step ahead. Let me deal with each of these in turn.
	"I announced to the House our intention to create the agency last month. Since then, we have consulted on how this should operate. The agency will bring together the responsibilities that currently fall to the National Criminal Intelligence Service, the National Crime Squad, parts of the Immigration Service dealing with organised immigration, and Customs and Excise on drug and people trafficking and related financial investigation. I wish to make clear our tribute to the professionalism and dedication of these agencies and the staff working in them.
	"The new agency will build on their success. It will bring together resources into a single organisation with a clear focus on drugs, people trafficking and financial crime. It will enable us to make more effective use of intelligence and to work more closely with specialist prosecutors. The new agency will enable us to bring more criminals to justice and reduce the harm that they cause.
	"The White Paper sets out how the new agency will operate. It will be a non-departmental public body, with operational independence, overseen by a small, strategic board accountable to Ministers for the delivery of priorities set out by them. The agency will be chaired by a part-time non-executive. It will be led operationally by a full-time director general. We will advertise for both posts shortly.
	"We will legislate to bring the new agency into being as soon as parliamentary time allows, but in the mean time, the existing agencies will work increasingly together to share objectives and a common strategy. In this way, we will begin to see the practical benefits of change during the transitional period. The creation of the agency gives us the opportunity to look at how best to improve performance and co-ordination, especially in the security of our borders.
	"We will ensure, therefore, that Customs, Special Branch and the Immigration Service work together effectively. My right honourable friend the Chancellor of the Exchequer and I will be directing the heads of each of these services to develop more closely aligned objectives and priorities through their individual business plans. This will ensure co-ordinated, strategically driven operational activity. These arrangements will not interfere with any existing structures of accountability.
	"Nowhere is this co-ordinated approach more important than in the battle against terrorism. At present, each of our 43 police forces maintains a separate Special Branch. Terrorists respect no such boundaries. I believe, therefore, that through greater co-ordination of their activity we can significantly enhance effectiveness. I am therefore creating a new national system to pool intelligence and co-ordinate operations. My announcement on 19 March of an extra £15 million, as well as strengthening the counter-terrorism branch of the Metropolitan Police, will enable us to achieve this goal more readily.
	"Defeating organised crime is not just about structures and effective operations. The powers available to our agencies to deter, disrupt and protect, are also critical. We need to make best possible use of our existing powers, whether probation licence conditions, asset recovery, immigration, or tax powers. On the latter, it was, after all, Elliot Ness from the Revenue who was crucial in leading to the conviction of Al Capone.
	"The Proceeds of Crime Act is significant in our efforts to deprive criminals of their assets. The new cash seizure powers are netting £1 million a week, and we are on track to meet this year's overall target of recovering £45 million. But there is much more we can do.
	"We will ensure better use of intelligence, management of information and that prosecutors are involved at an early stage.
	"Recent changes to the law have provided a more effective framework. But no group of defendants is more adept at manipulating legal safeguards. They make corruption and intimidation part of their system of defence.
	"As organised crime becomes more complex and organised criminals more sophisticated, so the need grows for new powers to gather evidence and for effective incentives for defendants to testify against their criminal associates. We will therefore build on the powers in the Criminal Justice and Sentencing Act.
	"With my right honourable and learned friend the Attorney-General and other colleagues, I have fundamentally reviewed the powers of our law enforcement agencies. As a result we propose to create Serious Fraud Office powers to compel the production of documents and information and to put Queen's evidence on a statutory footing in order to encourage defendants to plead guilty and to testify against co-defendants. We are taking forward the idea of a national witness protection programme; we will create new licence conditions. These would ensure that the finances of serious criminals are kept under close scrutiny after release.
	"Other reviews are also relevant to this work: the use of intercept material in court—we will provide a definitive proposal shortly; the law on conspiracy and secondary participation; and, of course, Sir Michael Bichard's review of data retention and information sharing between police forces.
	"With my right honourable and learned friend the Secretary of State for Constitutional Affairs, I am also asking the Sentencing Guidelines Council to review the existing sentencing regime to produce sentences which match more clearly the gravity of the underlying offences and the harm they cause.
	"Finally, we will need to ensure a clear focus on our protection of areas of organised crime where most damage is done. This means transforming the quality of our intelligence-driven effort. We must increase the risks and reduce the benefits of operating in this field.
	"The United Kingdom has never before produced a comprehensive strategy to tackle organised crime. With a new ministerial committee under my chairmanship and a better understanding of the harm caused, we have the building blocks to adopt a more focused approach.
	"The proposals I am publishing today will define a new approach for the 21st century which will match the threat and the sophistication we face. Defeating organised criminals is an objective I know we all share. I commend the White Paper to the House".
	My Lords, that concludes the Statement.

Baroness Anelay of St Johns: My Lords, I thank the Minister for repeating the Statement made a short while ago in the other place by her right honourable friend the Home Secretary.
	The Home Secretary said this morning during his BBC Radio 4 interview on the White Paper that he does not want any knee-jerk reactions to the proposals. I certainly undertake to reflect very carefully on the White Paper proposals in the coming months. Of course everyone wants those involved in serious organised crime to be brought to book, but the ink is barely dry on the Criminal Justice Act 2003 that took so much time in the House. That Act made substantial changes to the rules of evidence, including hearsay, bad character, prosecution appeals and re-trials for serious offences, and we do not yet know how those changes have affected our capability to do what we all want—that is, to ensure that serious organised crime feels the draught. So we will, of course, consider these proposals against the background of existing legislation.
	But let me make it clear that I support entirely the principles of the announcement made by the Home Secretary today to create a serious and organised crime agency. Indeed, how could I not when my own party has advocated the creation of such an agency for quite a long time?
	However, we still will need to have a rigorous scrutiny of the proposals. As noble Lords will know, I always bear in mind the Judge Bassingthwaighte principle: the more the Government and the Opposition agree on any matters, the more it is a duty for the Opposition carefully to check that they have got things right, otherwise policy may go astray and we may disproportionately damage our civil liberties.
	I read with great interest this morning the March edition of Police—the Police Federation's magazine—and its remarks on the creation of the new agency. I certainly agree with it that there is nothing wrong with the thinking behind the proposed new force. But the question marks concern the extent of the resources that will be allocated for its work and whether these will be entirely additional to the current funding of the police service. Is the £15 million referred to in the Statement intended to cover the creation and running of the new agency, as well as the strengthening of the counter-terrorism branch of the Metropolitan Police? I certainly hope not.
	There are also queries from the police about accountability. To what extent will the new body operate independently, regardless of the present statutory responsibilities of chief officers? For example, what impact will the new agency have on the autonomy of Chief Constables, which is so vital to the independence of our police forces? Who will decide what is a matter for the "super force" and what should be left to conventional forces?
	I join with the Minister in the proper tribute she has paid to the work of our police forces across the board. They will now find some of their work transferred to the new agency.
	Turning to some of the other issues within the Statement, I support the Home Secretary's announcement in regard to plea bargaining. We know that plea bargaining has worked well in countries such as Australia and America. However, I am aware that there have been problems in Northern Ireland, where it can create a situation whereby it is to the advantage of a criminal to, in the jargon, "fit somebody up". There can of course be no greater miscarriage of justice than that an innocent person should be gaoled so that a criminal can go free. How will the Home Secretary ensure that that does not happen?
	Does the Minister accept that it will be imperative for the Government to ensure that the victim is given a proper explanation of why an offender may be given a much reduced sentence in recognition of his or her co-operation; or, indeed, as I understand it, may be offered full immunity, not merely a reduced sentence? If the Government fail to get the balance right between giving super-grasses a quid pro quo and putting the victims' interests at the heart of the criminal justice system, then the work that we have done in the House so far this year on the victims Bill would be as nought.
	As regards intercepts, again a welcome from these Benches. But, again, an acknowledgement that there are dangers. We must ensure that we do not compromise intelligence sources. We know that intelligence information is, by its very nature, difficult to verify. It is surely imperative that we take steps to ensure that innocent people are not convicted on intelligence which turns out to be wrong. Above all, we need to protect the intelligence sources themselves and the way in which they operate so that we do not undermine their future viability.
	I was interested by the reference in the Statement to the fact that a statement will be made shortly in regard to this issue. I heard the Home Secretary say this morning that a review is underway. When she responds, will the Minister confirm that it will be as a result of the ongoing review that the Home Secretary will give further thought as to how intercepts may be dealt with?
	As regards sentencing, I am rather intrigued by the reference at the end of the Statement to the request being made by the Government to the Sentencing Guidelines Council to review the existing sentencing regime to produce sentences which match more clearly the gravity of the underlying offences and the harm they cause. What do the Government mean by "underlying offences"? What are those underlying offences exactly? What evidence do the Government have that they are not being properly addressed by the courts at the moment?
	In summary, we support the general thrust of the Statement but we are mindful of the fact that, for all of us, the devil is in detail. We look forward to proper scrutiny of it.

Lord McNally: My Lords, on my way here to speak to the Statement, I thought in a rather frivolous moment that I could refer to Elliot Ness. I then thought, "No, this is too serious a subject to bring that in"—but there is good old Elliot on page 3 of the Statement. That confirms my view that, in his more Walter Mitty moments, the Home Secretary does indeed see himself as a kind of Elliot Ness figure, kicking down doors and cutting corners in the battle against crime. That is why I endorse the approach of the noble Baroness, Lady Anelay. No one on these Benches disputes our determination to combat organised crime. Like the noble Baroness, we give a warm welcome to the general thrust of the Statement. But, in doing so, we will not take one step back from our duty as an opposition to scrutinise very carefully how these objectives are put into place and how they affect the rules of evidence and the balance of guilt in our criminal law practices.
	I hope that it goes without saying that we share the objective of making the UK one of the most difficult environments in the world for organised crime to operate in. However, there are worries for Parliament. Throughout history, and in other countries—the FBI under Hoover comes to mind—we have seen that if there is a massive concentration of power in powerful state bodies, whether they be police or security bodies, there is a need for a counterbalancing democratic and parliamentary accountability. I wonder whether this new super-agency will have parliamentary accountability built in.
	As the noble Baroness also mentioned, there is some murkiness about how it will relate to existing police authorities. I wonder whether the Home Secretary's thinking goes further. Does he see amalgamations of existing authorities, particularly some of the smaller ones, or even the concept of regional police authorities responsible to the new regional governments? Clearly, he is thinking big at one end, but one of the fundamental parts of our policing has been its local and democratic control.
	As someone who sat, sometimes slightly bemused, through the passage of the Regulation of Investigatory Powers Act, I am also slightly bemused about why it has taken so long to use some of the powers under that Act. I wonder whether inter-agency disputes are holding up implementation, as reported in the press, or whether some of the concerns about security, to which the noble Baroness, Lady Anelay, referred, have not yet been settled. Ministers must push to make it clear that they will not tolerate turf wars or the squirreling away of information—I have mentioned this in the House before. They must make the system work.
	We also welcome the recognition of the overlap between terrorism and organised crime. The application of the Data Protection Act and clearance for sharing information are mentioned in this document. They are clearly still obscure—if that is not too Irish. This White Paper repeats the worry, which we raised with the Minister during proceedings on the Domestic Violence, Crime and Victims Bill, that information is still not being exchanged between agencies because of fears of, or misinterpretations of, the Data Protection Act. During debates on the Domestic Violence, Crime and Victims Bill the Minister referred to an inter-ministerial committee and the Statement refers to Sir Michael Bichard's work. We should like to know when this matter will be resolved in a way that will allow exchanges to take place.
	I have two other brief points. There is still concern about whether our action on money laundering is biting. It is the oil that lubricates organised crime. We need the City of London, professionals, such as accountants and lawyers, and Crown dependencies, which are often seen as black holes in this matter, to co-operate fully to make a reality of cutting into money laundering.
	I should like a quiet report on how the Home Secretary is doing in his battle in Cabinet on ID cards. Is he winning or losing? We read so many leaks these days.
	Finally, the noble Baroness, Lady Anelay, made a point about sentencing. If there is a review that works out how the bad guys will get longer sentences, what will that do to our already over-crowded prisons? Will the Government show real determination to find alternatives to prison for less serious crimes, for young people or for women, as Cherie Booth was arguing over the weekend?
	Defeating organised crime is a shared objective. That is a given. So too are the defence of civil liberties, parliamentary accountability and the rule of law.

Baroness Scotland of Asthal: My Lords, I thank the noble Baroness, Lady Anelay, and the noble Lord, Lord McNally, for the warmth of their welcomes. We too wish these issues to be scrutinised with the greatest care. That is why we ask in the White Paper for comments and constructive criticism. I make no bones about it: the Government want to get the balance right. Noble Lords have rightly identified the need to tackle organised crime. Criminals are becoming more sophisticated and adept at using the system. They see no local or national boundaries. We must become more skilled at co-operating internally in order to meet the challenge that they pose.
	The noble Baroness, Lady Anelay, asked about the additional £15 million. It was for Metropolitan Police counter-terrorism. The resources for SOCA have yet to be determined. We shall listen very carefully to what is said by the new director-general, who will be responsible for operational activities, and to the non-executive chairperson.
	We want to build on the existing constitutional path. The details of the interaction between SOCA and the chief constables are to be determined. We listened very carefully to what the chief constables said and will take their views into account. I reassure noble Lords that the national policing plan makes organised crime one of the four key priorities for all forces. HMIC is already reviewing force performance in this area. SOCA will work closely in support of local forces through advice, intelligence and operational support. Local forces will have to deal with the criminals in their area. SOCA will focus on the higher level national and international players. Noble Lords will immediately notice that the interaction between those two levels is likely to be very significant. It is absolutely clear that co-ordination will be necessary to get it right.
	We too wish to balance the protection of the accused and society's interest in seeing the guilty convicted. We think that the powers that we are suggesting in the White Paper get it right. But we are very anxious to listen to noble Lords, and to those who reply to the White Paper, before we come to any definitive view.
	I note that the noble Lord, Lord McNally, referred to Elliot Ness. I assure noble Lords that my right honourable friend the Home Secretary does not see himself in that light. Perhaps a degree of mild levity is sometimes necessary to hone people's senses. I am delighted that my honourable friend the Home Secretary and the noble Lord, Lord McNally, were, at one stage in their ruminations, thinking along the same lines. There are difficulties about the application of sharing information. This is an issue which has been given very anxious consideration and we await the outcome.
	In response to the noble Baroness, Lady Anelay, we await the outcome of the review on intercept information. We made it clear in paragraph 6.2.2 of the White Paper that the Home Office-led review is expected to conclude by June this year. If the Government are satisfied that adequate safeguards can be designed to prevent the disclosure of sensitive capabilities, and if the review concludes that the benefits of this move would clearly outweigh the costs, then we will bring forward legislation to allow the evidential use of intercept material.
	Your Lordships will note the caveats. We have not seen the report; we do not yet know what is in it; but we are being clear and open about what that report may contain. We do not know what is in it and we shall have to reflect on it more carefully.
	We also accept that the interests of the victims are of absolutely critical importance. The noble Baroness asks about the need for explanation. That goes very much to the way in which we are seeking to deal and to engage with victims in the system: first, to gain their confidence so that they will be prepared to be witnesses; secondly, to keep them informed right the way through the process, so that they better understand the decisions we are making and have an opportunity to have input into the information before an informed decision is taken. I can certainly reassure the noble Baroness, therefore, that that is also very much in line with our thinking.
	The noble Baroness will know that almost the raison d'entre of the Sentencing Guidelines Council is to give us continuity and parity of treatment across the country. We know that, historically, different approaches have been taken in different areas in relation to a number of different crimes. It will be very important that, particularly when we are dealing with serious organised crimes, the guidance given to all our sentencers reflects the proper benchmark, so that they take into consideration that which the Sentencing Guidelines Council believes to be appropriate. We are absolutely confident that, under the chairmanship of the Lord Chief Justice, together with the other very able members of that council, they will be able to give the guidance to the sentencers which is needed to achieve parity of treatment and continuity across the board.

Lord Morris of Aberavon: My Lords, I very much welcome the broad thrust of the Government's proposals. The Minister is absolutely right to say that there should be a period of reflection in order to get the matter absolutely right, or as right as can be.
	May I ask a specific question, however? Is the Minister aware that there has been considerable concern over some years regarding the combination of the investigating and prosecuting responsibilities of HM Customs? The matter has been judicially investigated and reported upon. Is the situation now satisfactory?
	Lastly, what will be the practical effect of putting Queen's evidence on a statutory basis?

Baroness Scotland of Asthal: My Lords, I am aware that Her Majesty's Customs and Excise have in the past been subject to a certain amount of inquiry. I can assure my noble and learned friend that we are being very rigorous in the way in which we are approaching these matters, to make sure that the rules put in place are appropriate and robust enough to do that which we would wish them to do, in a way that is fair. Fairness, as my noble and learned friend will know, has to be the benchmark in relation to the content of those rules.
	My noble and learned friend also asked whether we thought it satisfactory. I have nothing to indicate that it is not satisfactory. As for why we are putting the Queen's evidence on a statutory basis, your Lordships will know that, even though the Queen's evidence is allowed under case law, we lag behind in this. For example, 1 per cent of Customs defendants gave evidence in exchange for leniency last year. We hope that placing this on a statutory footing will make clearer what are the incentives for those who co-operate, and will make it available where it is appropriate.
	The current proposal is that a defendant who wanted to co-operate would come to an agreement with the prosecutor. The defendant would offer full co-operation in the investigation, testify if necessary, and plead guilty of the offences he or she had committed. The prosecution would make an application to the judge, setting out the level of co-operation, and the judge would be able to impose a split sentence, setting out what the defendant would have received but for the co-operation and what he will actually receive. In the event that the testimony turned out to be false or misleading, it would be open to the prosecution to go back to court and to seek to have the original, higher sentence imposed. We aim to give clarity and transparency on how the matter will be dealt with, in a way that will be accessible, open and, we hope, clearly demonstrable as being fair and just.

Lord Goodhart: My Lords, to continue with the question of the Queen's evidence, is it not the case that courts and juries look with considerable suspicion on evidence which is given by a witness who has a clear personal incentive for giving that evidence? As is well known, there are witnesses who disclose in court that they have been paid by a newspaper, on terms which mean that they will get more money if the defendant is convicted than if he or she is not.
	Is that not doubly a problem when there is somebody who, for the co-operation and for giving evidence, has been offered a reduction in sentence, particularly where—as is not now the case—either the sentence is deferred until after the evidence has been given or the prosecution has a right to appeal against the sentence if the evidence turns out to be useless or misleading? In those circumstances are the Government satisfied that the Queen's evidence provisions will be effective in the battle against serious crime?

Baroness Scotland of Asthal: My Lords, we have looked at the situation not just here, but in Australia, the United States and elsewhere where these provisions have been applied. Other national responses will not necessarily equate with us.
	I can understand the noble Lord's anxiety about the way in which jurors may view this evidence. We very much take that on board, but, particularly when there is other supporting evidence confirming the evidence given on a Queen's evidence basis, this evidence can potentially be very useful and important.
	In order to make what is being done clear and open, we think it better that it should be on a statutory basis. Everyone is then able to understand its precise nature and there can be clarity—when the evidence is given and when the jury comes to determine whether to believe the evidence—about precisely what has happened to that particular individual.

Viscount Bridgeman: My Lords, in the absence of my noble friend Lord Glentoran who is in Committee at the moment, may I briefly refer to the position of organised crime in Northern Ireland?
	Your Lordships will be well aware that, just as progress was being made with community relations both before and after the Belfast agreement, the problem of drugs escalated and with it the impact of organised crime, feeding on the fertile ground of polarised communities. In Northern Ireland these are to a considerable extent openly controlled from within the prisons. I hope that that experience will be noted when it comes to legislation and practice on the mainland.
	May I also briefly refer to the treatment of supergrasses in Northern Ireland? I hope that both the Minister and the Lord President will pay careful attention to the Northern Ireland experience in the use and treatment of supergrasses. The proposed legislation to place Queen's evidence on a statutory basis for the protection of witnesses is likely to have a considerable effect on the use of supergrasses. I should hope that any proposed legislation as it affects Northern Ireland will pay attention to the totally ruthless treatment of these key witnesses and informants if their cover is blown; and, in addition, that any retrospective inquiries will protect them and prevent their being made more vulnerable.

Baroness Scotland of Asthal: My Lords, I reassure the noble Viscount, Lord Bridgeman, that the experiences in Northern Ireland will be taken into account. Your Lordships will have seen in the White Paper that we are considering what steps need to be taken for a national witness programme. One of the most distressing elements of the change in how organised crime is operating is the level of witness and victim intimidation in certain spheres, particularly in relation to the higher level of organised crime, with which we are dealing. I can therefore reassure the noble Viscount that the Government will carefully scrutinise these issues.
	I should add that the number of cases in which such provision is used in our country, at 1 per cent, compares unfavourably with places such as the United States of America, where it is 26 per cent. Our conviction rate in such cases is similarly not as advantageous as that for America, Australia and some of the other countries which have made better use of both Queen's evidence and the opportunity to plea bargain openly and frankly. We will take those issues very much into account.

Lord Lloyd of Berwick: My Lords, the noble Baroness will not be surprised to hear that I welcome very greatly any progress on the use of intercept evidence in court. I hope that she will do all in her power to ensure, so far as she can, that the review is complete by the end of June.
	On the other issue that has been mentioned, I welcome very much the suggestion that plea bargaining should be put on to a statutory basis for the purpose of eradicating organised crime and, in particular, terrorism. There are dangers, of course, but such a procedure has been found very successful—if my memory is correct—in Italy in dealing with the Mafia. It was for that reason that I recommended very strongly in the report that I wrote many years ago that something of this kind should be done.
	One question occurs to me. We are told that £1 million a week is being recovered under the Proceeds of Crime Act. Can the Minister say to what extent that relates to crimes committed before the Act came into force, or whether it relates solely to crimes committed since the Act came into force?

Baroness Scotland of Asthal: On the last issue, my Lords, I am not absolutely clear whether it is post or prior to the Act coming into force, but I shall certainly check. However, I can tell noble Lords that, as a result of the Act coming into force, we have been able to recover a huge amount of money that we would never have been able to recover before. We hope to reach the £45 million target. As your Lordships will anticipate through the mathematics, at the rate of £1 million per week, we are hopeful of far exceeding that figure. If we have that information, I certainly undertake to make it available.
	I very much welcome everything that the noble and learned Lord said in welcoming the Queen's evidence and about putting it on to a statutory basis as regards plea bargaining. He is absolutely right that very significant advances were made against the Mafia in Italy using exactly these sorts of strategies. We have to take that into account when we decide how to respond to a very similar scourge.

Lord Harris of Haringey: My Lords, I should declare an interest as chair of the Metropolitan Police Authority. In welcoming my noble friend's Statement, I seek further clarity on the issue of additional resources that may be made available to the new agency. In particular, there is concern both that these are financial resources that might be diverted from other policing activities and that expertise might be diverted from local police forces. I should be grateful for an explanation of whether it is envisaged that the resources will be additional, and, if so, how the protection of expertise can be maintained.
	I should also welcome some reassurance from my noble friend on the extent to which there will be close working between the new agency and local police services. There is a danger, I am sure, that the new agency might be seen as being parachuted into local areas to carry out particular operations, while it is the local police who will have to deal with any community consequences after such an operation. Local police may also have much more community intelligence which could inform the actions of the agency. So I would very much welcome some clarity about the relationship with local police services.

Baroness Scotland of Asthal: My Lords, I can add little to what I have already said. The noble Lord will know from the Statement that my right honourable friends the Chancellor of the Exchequer and the Home Secretary will be looking very closely at these issues. When those two look closely, one can anticipate that the issue of resources will be close to their hearts and their deliberations.
	The partnership working between the new agency and the local police forces will be critical because local intelligence and international intelligence merge when we are considering issues of serious crime. Organised crime is just that, because the organisers have to be both international and local. So I can certainly reassure the noble Lord that it is not being contemplated that the new agency will simply parachute in without fully engaging local forces. It just would not work in that way. Partnership is going to be key to ensuring that this new agency takes off.
	Your Lordships will know that the agency will include staff from Customs, NCIS and NCS—approaching, I think, about 5,000 members of staff. The agencies planning to move to the new agency currently have a budget of about £375 million. New legislation will set out the constitutional and governance arrangements of the new agency; provide it and its staff with necessary powers; ensure that it remains accountable to Ministers, Parliament and the public; and make provision for a range of legacy issues. All those issues will have to be resolved before the agency is finally up and running and comes into being. I hope that that is of some help to my noble friend.

Lord Renton: My Lords, I, too, welcome the Statement made by the noble Baroness. Will she bear in mind that in the past 40 years organised crime has varied from time to time in different parts of the United Kingdom? Can she assure us that the proposals that the Government have in mind will enable greater concentration on prevention and dealing with crime in places where it appears to be worst?

Baroness Scotland of Asthal: My Lords, I reassure the noble Lord, Lord Renton, that this service is being created to give us a more comprehensive understanding of organised crime across the country and to collate intelligence across the board. It is not just about drugs; it feeds into people trafficking, money laundering and all the other aspects of the most serious end of crime. We will have to use much more creatively and in a much more targeted way the intelligence about what is happening on the ground. We are by no means saying that what we do now is not of excellent quality. However, if we can organise that in a more structured way, we will get even greater benefits from the reorganisation.

Lord Marlesford: My Lords, the Statement points out that,
	"each of our 43 police forces maintains a separate Special Branch. Terrorists respect no such boundaries".
	Does that mean that there will be a national Special Branch? If not, why not? And would not "the National Special Branch" be a better name than the rather woolly name already coined for the agency? Perhaps in the consultation the Government will be open to considering better names.
	Secondly, do the Government recognise that an essential prerequisite for achieving the objectives in the Statement is to have a central record of individuals, with biometric means of linking those individuals to their activities? Finally, on Al Capone: I know it was probably intended as a joke, but it refers to something 60 years ago that represented a major failure of the American justice system, which is why Al Capone was the only person convicted of tax evasion who ended up in Alcatraz.

Baroness Scotland of Asthal: My Lords, we want a number of his kind to go in the same direction and we hope that our British agency will be more effective than any others. I know that the House will be confident about that.
	I cannot give any indication as to whether the name SOCA will change. I should share with noble Lords that many people of Afro-Caribbean extraction might like the name SOCA because it describes rhythmic and successful Caribbean dancing, so it may have a nice connotation for some. But I am sure that these are issues which we will look at in due course.

Lord Marlesford: My Lords, biometrics?

Baroness Scotland of Asthal: My Lords, as regards biometrics, I cannot tell your Lordships exactly what the central records will contain. Your Lordships will know that biometric data are the most useful data for us to have in relation to tracking; the intelligence services have been able to—but I should not say that, should I? I shall simply say that biometric data are an issue that has certainly excited a lot of proper attention in the detection of crime.

The Earl of Mar and Kellie: My Lords, could the noble Baroness clear up whether what she described extends over the United Kingdom or is merely a plan for England and Wales? I ask that because I live in Scotland.

Baroness Scotland of Asthal: My Lords, the agency will cover England and Wales. I will write to noble Lords about how the agency may co-operate with agencies in Scotland and Northern Ireland.

Lord Hylton: My Lords, the Statement did not say a word either about the trafficking of arms or about those people who hold illegal weapons in this country. Can the noble Baroness throw light on that subject, which is pretty urgent?

Baroness Scotland of Asthal: My Lords, did I understand the noble Lord to talk about arms in terms of guns and how that would be dealt with? Any form of trafficking will be covered by the new agency. However, I should address and correct what I just said when answering the noble Earl in relation to UK-wide. The new agency will have a UK-wide remit. However, in Scotland and Northern Ireland the Scottish Drug Enforcement Agency and the Police Service of Northern Ireland will continue to exercise those functions they currently undertake in partnership with the existing UK agencies. I was wrong to say that it would not be UK-wide; it is UK-wide, but it preserves two different distinctions and that is what confused me.
	I believe that arms are covered. I will write to noble Lords. It depends whether arms fall into the organised crime bracket.

Energy Bill [HL]

Further consideration of amendments on Report resumed.
	Clause 107 [Use of green certificates issued in Northern Ireland]:

Lord Whitty: moved Amendments Nos. 191A to 191C:
	Page 89, line 14, leave out "Authority for Energy Regulation" and insert "authority"
	Page 89, line 18, leave out subsection (2).
	Page 89, line 23, at end insert—
	"(4) In Article 56(1) of the Energy (Northern Ireland) Order 2003 (S.I. 2003/419 (N.I. 6)) (power to amend Part 7 of that Order to take account of amendments of corresponding Great Britain provisions), the reference to amendments made to sections 32 to 32C of the 1989 Act includes a reference to subsection (1) of this section.
	(5) Subsection (4) extends to Northern Ireland only."
	On Question, amendments agreed to.
	Clause 108 [Distributions to Northern Ireland suppliers]:

Lord Whitty: moved Amendment No. 191D:
	Page 89, line 29, leave out from "are" to end of line 31 and insert "Northern Ireland suppliers.""
	On Question, amendment agreed to.

Lord Triesman: moved Amendment No. 191E:
	After Clause 108, insert the following new clause—
	"SUPPLEMENTARY PROVISION RELATING TO RENEWABLES OBLIGATION IN GREAT BRITAIN
	(1) In subsection (3) of section 32 of the 1989 Act (definition of renewables obligation), for "and 32C" substitute "to 32C".
	(2) In subsection (7) of that section, for paragraph (d) substitute—
	"(d) such generators of electricity from renewable sources as he considers appropriate; and".
	(3) After subsection (8) of that section insert—
	"(8A) In this section and in sections 32A to 32C—
	'generated' means generated at any place whether situated in the United Kingdom or elsewhere, and cognate expressions shall be construed accordingly;
	'Northern Ireland authority' means the Northern Ireland Authority for Energy Regulation;
	'Northern Ireland supplier' means an electricity supplier within the meaning of Part 7 of the Energy (Northern Ireland) Order 2003."
	(4) In section 32A of that Act (supplementary provision relating to orders under section 32), in subsection (3) for the words from "the differences" onwards substitute "no supplier would by virtue of the differences be unduly disadvantaged in competing with other suppliers".
	(5) After that subsection insert—
	"(3A) In subsection (3) 'supplier' means an electricity supplier or a Northern Ireland supplier."
	(6) In subsection (7) of that section, for "obligation imposed" substitute "matters dealt with".
	(7) The requirements of section 32(7) of that Act (consultation before making an order) may be satisfied in the case of an order containing provision made by virtue of this section by consultation that took place wholly or partly before the commencement of this section."

Lord Triesman: My Lords, Amendments Nos. 191E, 191F, 191G and 191H make further provisions relating to the issue of ROCs with respect to Northern Ireland. First, Amendment No. 191E makes a number of supplemental changes relating to the issue of Great Britain ROCs for renewable electricity supplied in Northern Ireland. To avoid overlap between GEMA's role and that of the Northern Ireland Authority for Energy Regulation in respect of such electricity, the Northern Ireland Authority will issue NIROCs for generating stations located in Northern Ireland, including its inland waters but not UK territorial waters adjacent to Northern Ireland, and GEMA will issue ROCs for all other generators. GEMA may not, however, issue a ROC in respect of electricity supplied in Northern Ireland, and must revoke any such ROC that it has already issued, if the Northern Ireland Authority notifies it that the authority is not satisfied that the electricity in question has been supplied to customers in Northern Ireland. For electricity supplied in Great Britain, the position will remain unchanged, with GEMA as the only issuing authority.
	Turning to the other amendments in this group. Amendment No. 191F also provides for the sale of NIROCs that relate to Northern Ireland NFFO—pronounced "noffo"—output, separately from the renewables electricity to which the NIROCs relate. Without this provision, Great Britain suppliers are unlikely to participate in auctions of NIROCs with the underlying electricity since they would have no use for the electricity which cannot be exported from Northern Ireland to Great Britain because of the interconnector limitations.
	Finally, the Government are taking powers in Amendment No. 191F to allow a proportion of the funds arising from the auctioning of Northern Ireland NFFO ROCs to be paid to DETI. The DETI's existing obligation to pay moneys received into the Consolidated Fund of Northern Ireland will apply to moneys that DETI receives as a result of exercise of this power. However, DETI intends to request that a budget allocation is made for an amount of money equal to any such payments into the Consolidated Fund to be used for the promotion of the use of renewable energy sources in Northern Ireland. This provision is similar to the provision already available in England and Wales and which is being sought by Scotland within this Bill. On the basis of the ROC prices reached in recent equivalent Scottish auctions of ROCs, the total proceeds of the Northern Ireland NFFO auction are expect to amount to between £4 million and £5 million per annum during the early years and declining thereafter until the contracts expire in 2010.
	Amendment No. 191G makes clear that both GEMA and the Northern Ireland Authority are entitled to enter into arrangements for GEMA to carry out Northern Ireland renewables obligation functions of the Northern Ireland Authority. Clause 109 currently refers only to GEMA as being entitled to enter into these arrangements.
	Amendment No. 191H replaces a reference to Ofreg with a reference to the "Northern Ireland Authority" and is a minor drafting change. I beg to move.

On Question, amendment agreed to.

Lord Triesman: moved Amendment No. 191F:
	After Clause 108, insert the following new clause—
	"ISSUE OF GREEN CERTIFICATES IN NORTHERN IRELAND
	(1) Article 54 of the Energy (Northern Ireland) Order 2003 (S.I. 2003/419 (N.I. 6)) (which contains provision corresponding to provision contained in section 32B of the 1989 Act) is amended as follows.
	(2) After paragraph (2) insert—
	"(2A) In paragraphs (1) and (2) 'Northern Ireland' does not include any part of the territorial sea of the United Kingdom.
	(2B) The provision that may be contained by virtue of this Article in an order under Article 52 includes—
	(a) provision for the person to whom a certificate is to be issued to be determined either before or after the supply of the electricity to which it relates; and
	(b) provision for a determination as to the person to whom a certificate is to be issued to be made in accordance with such arrangements as may be specified in or determined under the order.
	(2C) In the case only of a certificate relating to electricity that has been acquired, or is required to be acquired, under a qualifying arrangement, the arrangements within paragraph (2B)(b) that may be specified in or determined under the order include arrangements—
	(a) requiring the determination of the person to whom the certificate is to be issued to be made by reference to financial bids made in respect of the certificate or in respect of both the certificate and the electricity to which it relates; and
	(b) requiring that person to make a payment, in accordance with his bid, to such person as may be specified in or determined under the order.
	(2D) In the case only of a certificate relating to electricity that has been acquired, or is required to be acquired, under a qualifying arrangement, provision falling within paragraph (2B)(b) may require the relevant person—
	(a) to make and implement the arrangements that are specified in or determined under the order; and
	(b) to comply with directions given to him by the Authority for that purpose.
	(2E) A person who receives a payment in accordance with provision made by virtue of paragraph (2C)(b) shall apply the money received in such manner as the Department may direct.
	(2F) A direction under paragraph (2E) may require that the money received or part of that money be paid to the Department.
	(2G) Part VI shall apply in relation to a requirement imposed by virtue of paragraph (2D) or (2E) on a person who is not an electricity licence holder as if he were an electricity licence holder."
	(3) After paragraph (3) insert—
	"(4) An order under Article 52 may confer on the Authority functions in Northern Ireland in relation to the issue of Great Britain certificates.
	(5) In this Article—
	'Great Britain certificates' means certificates that are or may be issued by the Gas and Electricity Markets Authority in accordance with provision included, by virtue of section 32B of the Electricity Act 1989, in an order under section 32 of that Act;
	'qualifying arrangement' means an arrangement made pursuant to an order under Article 35 of the Electricity Order (or such an arrangement as modified or replaced by virtue of an order under Article 57 of this Order);
	'relevant person' means, in relation to electricity that is acquired, or is required to be acquired, under a qualifying arrangement, the person who acquired it, or who is required to acquire it."
	(4) The requirements of Article 52(6) of that Order (consultation before making an order) may be satisfied in the case of an order containing provision made by virtue of this section by consultation that took place wholly or partly before the commencement of this section.
	(5) This section extends to Northern Ireland only."
	On Question, amendment agreed to.
	Clause 109 [GEMA's power to act on behalf of Northern Ireland regulator]:

Lord Triesman: moved Amendments Nos. 191G and 191H:
	Page 89, line 37, after "GEMA" insert "and the Northern Ireland Authority for Energy Regulation ("the Northern Ireland Authority")"
	Page 89, line 38, leave out from "arrangements" to second "for" in line 39 and insert "for GEMA to act on behalf of the Northern Ireland Authority"
	On Question, amendments agreed to.

Lord Triesman: moved Amendment No. 191J:
	Page 89, line 40, leave out "OFREG's" and insert "the 2003"

Lord Triesman: My Lords, this is a small amendment, as noble Lords may be delighted to know, which deletes the reference in subsection (2) of Clause 109 to Ofreg and replaces it with a reference to the Northern Ireland Authority. The result of this amendment is that subsection (2) of Clause 109 defines,
	"the 2003 renewables obligations functions",
	as being those functions conferred on the Northern Ireland Authority under or for the purposes of Articles 52 to 55 of the Energy (Northern Ireland) Order 2003. This brings consistency of language to this part of the Bill, with the relevant Northern Ireland legislation. It is desirable to have clarity and consistency, and it is on that basis that I commend the amendment. I beg to move.

On Question, amendment agreed to.

Lord Triesman: moved Amendment No. 191K:
	Page 90, line 1, leave out "OFREG's" and insert "the 2003"
	On Question, amendment agreed to.

Lord Triesman: moved Amendment No. 191L:
	Page 90, line 2, leave out "OFREG" and insert "the Northern Ireland Authority"

Lord Triesman: My Lords, the speed has almost caught me out. I have turned past the amendment; forgive me. I think that we have covered the amendment.

Lord Brougham and Vaux: My Lords, it stands on its own.

Lord Triesman: My Lords, I apologise. It is also a textual amendment that inserts "the Northern Ireland Authority" to replace "OFREG". Whether or not it stands on its own, it has exactly the same impact as previous amendments. I beg to move.

On Question, amendment agreed to.

Lord Triesman: moved Amendment No. 191M:
	After Clause 109, insert the following new clause—
	"CONSULTATION IN RELATION TO NORTHERN IRELAND RENEWABLES ORDERS
	(1) This section applies where the Department of Enterprise, Trade and Investment in Northern Ireland amends the provisions of Part 7 of the 2003 Order (renewables obligations for Northern Ireland suppliers) by way of an amending order to take account of amendments of the 1989 Act made by this Chapter.
	(2) In the case of a renewables order containing provision made by virtue of the amending order, the requirements of Article 52(6) of the 2003 Order (consultation before making a renewables order) may be satisfied by consultation that took place wholly or partly before the amending order came into force (including consultation taking place before the commencement of this section).
	(3) In this section—
	"amending order" means an order under Article 56 of the 2003 Order;
	"the 2003 Order" means the Energy (Northern Ireland) Order 2003 (S.I. 2003/419 (N.I. 6));
	"renewables order" means an order under Article 52 of the 2003 Order.
	(4) This section extends to Northern Ireland only."

Lord Triesman: My Lords, I shall speak to Amendments Nos. 191M and 191N. The first relates to the timing of consultations on a renewables obligation order for Northern Ireland, allowing the DETI to consult on the detail as soon as possible and, if necessary, before it has made the amending order that it needs to make to reflect the changes introduced to the Electricity Act by the Bill. The new clause extends to Northern Ireland only.
	The second amendment, Amendment No. 191N, allows the DETI to modify energy licence conditions in relation to amendments made to the energy order. Its principal purpose is to ensure that some or all the proceeds of the sales of the Northern Ireland NFFO NIROCs can, if appropriate, be used to offset the cost of the Northern Ireland NFFO to Northern Ireland consumers. That is already the case in relation to funds from the sales of the Northern Ireland NFFO electricity itself. That power will be able to be used for funds that have not been directed to other renewable uses by the DETI.
	The amendments are useful and will ease the implementation and administration of renewable energy policy in Northern Ireland. I beg to move.

On Question, amendment agreed to.

Lord Triesman: moved Amendment No. 191N:
	After Clause 109, insert the following new clause—
	"MODIFICATION OF CONDITIONS OF NORTHERN IRELAND ELECTRICITY LICENCES
	(1) In Part 7 of the Energy (Northern Ireland) Order 2003 (S.I. 2003/419 (N.I. 6)) (renewable energy sources), after Article 58 insert—
	"58A MODIFICATIONS OF LICENCES IN CONNECTION WITH ENERGY ACT 2004
	(1) Where the Department or the Authority considers it necessary or expedient to do so in connection with—
	(a) amendments of this Order made by section (Issue of green certificates in Northern Ireland) of the Energy Act 2004, or
	(b) provision made by an order under Article 56 to take account of amendments of the Electricity Act 1989 made by Chapter 3 of Part 2 of that Act of 2004,
	it may modify the conditions of an electricity licence.
	(2) The power to make modifications under this Article includes power to make incidental, consequential or transitional modifications.
	(3) Before making a modification of a licence condition under this Article the Department shall consult the Authority and the licence holder.
	(4) Before making a modification of a licence condition under this Article the Authority shall—
	(a) consult the licence holder; and
	(b) obtain the consent of the Department to the modification.
	(5) Paragraphs (3) and (4)(a) may be satisfied by consultation—
	(a) that, in the case of a modification within paragraph (1)(b), took place wholly or partly before the order in question comes into force; and
	(b) that, in any case, took place wholly or partly before the commencement of this Article.
	(6) Where the Department or the Authority makes any modifications under this Article it shall publish those modifications in such manner as it considers appropriate.
	(7) The power conferred by virtue of paragraph (1)(a) may not be exercised after the end of the period of two years beginning with the commencement of this Article.
	(8) The power conferred by virtue of paragraph (1)(b) may not be exercised in relation to an order under Article 56 after the end of the period of two years beginning with the day on which the order comes into force."
	(2) This section extends to Northern Ireland only."

Lord Triesman: My Lords, I beg to move.

Baroness Carnegy of Lour: My Lords, the fourth and fifth lines from the bottom of page 8 in the Marshalled List make up proposed new paragraph (2) in the amendment, which reads:
	"The power to make modifications under this Article includes power to make incidental, consequential or transitional modifications".
	Are those modifications limited in any way? When Parliament legislates in such a way, it is usual to make quite sure that such modifications are limited to the matter under consideration in the relevant part of the Bill.

Lord Triesman: My Lords, the geographical limitation is quite clear; it is self-evidently to Northern Ireland. The energy licence conditions in general are modifications simply intended to ensure that the proceeds of the sale of NFFO NIROCs in Northern Ireland are used to offset costs to Northern Ireland consumers. I do not think that there is a limitation placed on the extent to which that may be achieved; it will probably be conditioned in large measure by the sums realised.

On Question, amendment agreed to.

Lord Ezra: moved Amendment No. 192:
	After Clause 109, insert the following new clause—
	:TITLE3:"CHAPTER 4
	ELECTRICITY GENERATION USING CLEAN COAL TECHNOLOGIES
	OBLIGATION IN CONNECTION WITH ELECTRICITY FROM COAL
	After section 32C of the 1989 Act there is inserted—
	"32D OBLIGATION IN CONNECTION WITH ELECTRICITY FROM COAL
	(1) The Secretary of State may by order impose on each electricity supplier falling within a specified description (a "designated electricity supplier") an obligation to do what is set out in subsection (3) (and that obligation is referred to in this section and sections 32E to 32G as the "clean coal obligation").
	(2) The descriptions of electricity supplier upon which an order may impose the clean coal obligation are those supplying electricity—
	(a) in England and Wales;
	(b) in Scotland; or
	(c) in Northern Ireland,
	excluding such categories of supplier (if any) as are specified.
	(3) Subject to the provisions of this section and sections 32E and 32G, the clean coal obligation is offered to designated electricity suppliers who, before a specified day, produce to the Authority evidence of a specified kind showing—
	(a) that it has supplied to customers in the United Kingdom during a specified period such amount of electricity generated from coal by using clean coal technologies as is specified in relation to such a supplier;
	(b) that another electricity supplier has done so (or that two or more others have done so); or
	(c) that, between them, they have done so.
	(4) Before making an order, the Secretary of State must consult—
	(a) the Authority;
	(b) the Council;
	(c) the electricity suppliers to whom the proposed order would apply;
	(d) the generators of electricity from coal; and
	(e) such other persons, if any, as he considers appropriate.
	(5) In this section—
	"clean coal technologies" means specified technologies for the generation of electricity from coal that meet specified pollutant emission performance criteria.
	"specified" means specified in the order.
	(6) An order under this section shall not be made unless a draft of the instrument containing it has been laid before, and approved by a resolution of, each House of Parliament.""

Lord Ezra: My Lords, with the amendment are grouped Amendments Nos. 193 to 195, which are consequential. The amendment deals with the need as I see it for an obligation for the use of electricity from coal. I moved a similar amendment in Grand Committee on 12 February and have taken careful note of what was said on that occasion. I have drafted this amendment accordingly.
	Coal now represents our most substantial energy reserve. We are running out of oil and gas in the North Sea and shall become increasingly dependent on imports. It is therefore important to work out ways in which those reserves of coal can be used effectively to diminish our import dependence. As we all know, the problem with coal is that, burnt in traditional methods, it creates a lot of pollution. However, there are ways in which it can be burnt to minimise that pollution.
	The Government have supported the concept of clean coal technologies—I refer specifically to page 92 of the energy White Paper—and have drawn attention to the fact that they can be relevant not only to our use in this country, but even more so to countries such as China and India that will use substantial quantities of coal. They have very big reserves of coal for the future and it is important, from the point of view of the global environment, that they burn that coal in as efficient a manner as possible. Therefore, the existence of plant in the UK demonstrating the ways in which that could be done would be of considerable importance not only here, but in the promotion of our activities abroad.
	The amendment is drafted to limit the possibility of introducing such an order until substantial consultations have taken place and until, under its proposed new subsection (5), "clean coal technologies" are defined as,
	"the generation of electricity from coal that meet specified pollutant emission performance criteria".
	In other words, we are talking about issuing orders for the use of coal after it has been treated in a green manner, and after very full consultation.
	Let us be quite clear: even if, as I hope, such a provision were included in the Bill, it would take a long time before the fuel could come on to the market. It would be at least three years before one, two or perhaps even three medium-sized electricity generating plants would be constructed and the order could bite. Therefore, there is not very much commitment to financial involvement.
	On the other hand, such a provision in the Bill would achieve two important things. First, it would encourage the coal industry, which now has grave doubts about its future, and to which I believe the Labour Party has traditionally given its wholehearted support. Here is a way of reinforcing that support, having regard to future environmental considerations. Secondly, as I have pointed out, this could open up enormous prospects for exports. But I do not believe that we can persuade possible overseas customers to accept our technology unless we have something to show them. At the moment we have nothing. We have a limited amount of research, which is much overshadowed by greater research efforts in the United States and elsewhere.
	This could be a positive measure that is much in line with the objectives of the energy White Paper. It could help to diminish our growing dependence on imports and could give some prospect of a future to our largest remaining indigenous energy resource. Therefore, I beg to move.

Lord Jenkin of Roding: My Lords, I was intrigued by the comments of the noble Lord, Lord Ezra, about the traditional support given by the Labour Party to the coal industry and I thought of the enormous burden that now rests on the shoulders of the noble Lord, Lord Randall, because of his position as sole occupant of the Labour Back Benches. I beg the House's pardon, because the noble Lord, Lord Carter, has just appeared. That makes two.
	The noble Lord, Lord Ezra, makes an important point. Very little is being done in this country to advance the cause of clean coal technology. Indeed, it is not many months since one of the effects of NETA—the electricity trading arrangements—drove DRAX almost out of business, operating for only four hours out of 24. That was not a clever move, because DRAX power station has the greatest amount of flue gas desulphurisation in this country. The noble Lord is correct to say that there is a huge amount of work being carried out in other countries and that should be the case here.
	I remember a visit I made some years ago, as a shadow energy spokesman, to the Coal Industry Research Establishment, just outside Cheltenham. There I encountered a technologist who appeared to be working on his own on the underground gasification of coal as a much better way of exploiting our coal resources than by sending men down the pits. I put my arm around his shoulder and said, "My friend, I don't know whether you realise it, but you may have the entire future of the coal industry on your shoulders". I do not know what became of that research, but it is one of the ways in which—through underground gasification—one can produce a product that can be treated effectively with a variety of refining techniques and produce what the noble Lord, Lord Ezra, seeks: the ability to take heat from coal without generating carbon dioxide and other noxious gaseous emissions. We ought to be doing that.
	After consulting briefly with several people in the electricity industry, I found that they had not heard of the amendment tabled by the noble Lord, Lord Ezra, and they felt that to introduce it at this stage might be premature. But I hope that the Government will take seriously the comments of the noble Lord about the need to step up research on clean coal technology. It is essential because, as the noble Lord said, we have hundreds of years of reserves and it would be foolish if a technology were devised that we could not use. Although we may not feel able to support this particular amendment, the thought behind it is extremely important.

Baroness Carnegy of Lour: My Lords, the noble Lord, Lord Ezra, knows a great deal about this matter. It would appear that we need the widest possible range of energy sources and we need to use our own coal in the best possible way. I can see the problems of timing, but the main point is that the Government must bear in mind the tremendous advantage that there has been to this country by exploring for oil in the deep sea. That technology has been sold to our enormous advantage across the world—to China and many other countries—because the oil industry had sufficient vision to see that, as the oil in the North Sea reduced, the industry's skill and technology could be sold. Surely we need to do that in the case of clean coal—and that is the noble Lord's most important point.
	I hope that the Government will not just dismiss the amendment as a pipe dream—the matter should be attended to now regarding the export of expertise. We must ensure that we have that expertise to export.

Lord Whitty: My Lords, the role of clean coal technology is likely to be important in our energy policy and the sustainable use of our coal resources. Coal-fired power generation is likely to be with us for many years and if we are to meet our energy targets we need to use it significantly more cleanly than at the moment. I somewhat refute the suggestions that the Government have been doing nothing about this matter. We have recognised for some years that clean coal technology has a role to play and we have been investing in R&D in this area. In fact we have committed some £9 million of support for this programme, including 39 projects and another £4 million for cleaner coal technology over the next two years. That includes not just the cleaner use of technology and the mitigation of negative carbon effect; the DTI also has a programme under way looking at the feasibility of underground gasification of coal, referred to by the noble Lord, Lord Jenkin, which could also make a contribution. As the noble Baroness, Lady Carnegy, said, it could help not only us but elsewhere in the world.
	In addition we are starting to develop, in collaboration with the energy industries, a new carbon abatement technology strategy and coal will be a key element. Some of that will be published next year. So I do not believe that the Government's commitment to clean coal technology should questioned. We have our own R&D and we learn from international R&D.
	However, the amendments before us would effectively create a clean coal obligation. A mechanism for clean coal similar to the renewables obligation would be hugely more complicated. We know that renewable technologies do not create any emissions, but for fossil fuels there are not only carbon emissions but a number of other gases which can damage the environment, particularly sulphur and NOx, for which developments are also taking place. The measurement of how far the clean coal technology was contributing to carbon saving also needs to take account of what we are doing in relation to other gases. Also, it is not easily offset against the renewables obligation and other more straightforward measures that are required of industry in that regard.
	We will implement some other measures that will encourage the control of emissions. The Large Combustion Plant Directive, which will primarily focus on sulphur and nitrous oxides when it is implemented in 2008, will also have an effect on coal burning. The emissions trading scheme that is due to start next year will encourage the control of carbon dioxide emissions from coal and other fuels. Both measures will help to drive the markets to more sustainable and more novel uses of coal within the technologies available—and will help us to develop better technologies. To express that in terms of an obligation would be difficult and complicated. It would divert from the renewables obligation and it would not be clear how much of a contribution it could make compared with other measures to support and deliver clean coal technologies that are either in place or will be in place in a few years' time, which will make some contribution to our carbon reduction objectives.
	I support clean coal technology and want to see measures to speed up its adoption, but I do not think that an obligation is the way to do it.

Lord Ezra: My Lords, I thank the noble Lord, Lord Jenkin of Roding, for his supportive remarks and the noble Baroness, Lady Carnegy. I thank the Minister for his encouraging remarks. What worries me is how we move from supportive remarks and from limited expenditure on research and development to having a plant or two in this country. I cannot see how that will happen. The way we are going, we could go on dribbling a few million pounds more here and there into research and development, which is minute compared with what is being done in the United States, for example, from which experience we should be learning.
	When do we reach the point at which we can have a plant to demonstrate, to potential customers not only in the UK but in China, India and elsewhere? That is the problem that worries me, which I shall continue to explore and tackle. I hope the Minister and his colleagues in the Government will give it further consideration. The White Paper referred specifically to a demonstration plant. It states on page 92, which I quoted earlier: "With this in mind"—namely, to have a plant which can be used as a demonstration for other countries—
	"we have already put in place a programme of support for advanced traditional cleaner coal technologies which is intended to bring forward demonstrator projects that may help to showcase the relevant technology more widely".
	When is that going to be done? When will we see the hardware? When will we move from talk and limited amounts of R&D to having a bit of plant in place? It was stated in the White Paper, but lacking in the Minister's remarks. He did not indicate when we might see the plant in operation. That was the purpose of my amendment.
	However, I would like to reflect on all that was said and consider whether to return to the issue at the next stage or in some other way. In the mean time I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.
	[Amendments Nos. 193 to 195 not moved.]

Lord Ezra: moved Amendment No. 195A:
	After Clause 109, insert the following new clause—
	"RENEWABLE TRANSPORT FUEL OBLIGATION
	(1) In order to comply with EU Directive 2003/30/EC, which requires Member States of the European Union to demonstrate how biofuels are to be placed on their markets in increasing quantities to 2010, and to comply with the further requirement that Member States shall inform the Commission by 1st July 2004 of their initial targets for December 2005 and how they plan to meet these, there shall be a renewable transport fuel obligation for the United Kingdom.
	(2) The obligation shall require all producers selling road transport fuel in the United Kingdom to show that over the course of a calendar year a specified proportion of such fuel was biofuel.
	(3) For the calendar year 2006 this proportion shall be 1 per cent by energy content and this proportion shall increase annually by 1 per cent until 2010.
	(4) Producers, blenders and other relevant companies and persons shall make such returns to Her Majesty's Customs and Excise as may reasonably be required to demonstrate such compliance with the obligation both as to the amount of biofuel produced and used and the origin of the relevant feedstocks.
	(5) Biofuel producers, blenders and other relevant companies and persons shall receive the biofuel duty rebate due to them on fulfilment of their obligations under this section.
	(6) A shortfall on their obligation shall incur a proportional loss of such rebate as set out in subsection (5).
	(7) Any shortfall on the obligation shall in addition incur a penalty in proportion to the shortfall and this penalty, expressed as pence per litre, shall be fixed annually.
	(8) Any such penalty payments shall be pooled and the total amount distributed annually to compliant suppliers pro rata to supplies placed by them the market.
	(9) No fuel shall be recognised as a biofuel for the purpose of the obligation unless the carbon dioxide saving on a full life cycle analysis can be shown in the returns made under subsection (4) to be in excess of a 60 per cent improvement compared with the relevant fossil fuel comparator and in the case of biodiesel this shall be ultra low sulphur diesel and for bioethanol it shall be ultra low sulphur petrol.
	(10) For the purposes of the obligation, biofuels shall be defined as fuels produced from the biodegradeable fraction of agricultural products, wastes and residues (including vegetable and animal substances), forestry products and waste and the biodegradeable fraction of industrial and municipal waste.
	(11) The power conferred by this section on the Secretary of State and the Treasury to make an order or regulations is a power exercisable by statutory instrument under the affirmative procedure."

Lord Ezra: My Lords, this amendment, which deals with biofuels, was moved in Grand Committee. It is an important element in energy policy and it would be an important addition to the Bill. It proposes a renewable transport fuel obligation. From what we have just discussed I imagine that the Government do not particularly like the term "obligation", but it is appropriate in this case.
	I have taken full account of what was said in Grand Committee. The revised amendment refers specifically to the EU directive 2003/30/EC, which has been available for some time—I believe that it was published last July—and on which consultations are meant to be taking place.
	The proposal before us is to introduce legislation that would support the application of that directive. There is no doubt, both in the Government's mind and elsewhere, that there can be a big contribution to their objectives on reducing emissions by introducing progressively a proportion of renewable fuels into the energy consumed by transport. Through the development of biofuels that objective could not only be served but it would give an additional outlet for the agricultural industry, which is going through so much difficulty at the present time.
	Many countries are already introducing an element of biofuel into their petrol. The biggest example is Brazil, where up to 20 per cent biofuels have been introduced into petroleum usage, but the Brazilians have substantial amounts of sugar at their disposal which creates biofuels. We are talking in much smaller terms of increasing annually by 1 per cent until 2010. That could be an enormous benefit both in the achievement of the environmental objectives and for the agricultural industry. We believe that the amendment is in line with the EU directive and we hope that the Government will be able to support it. I beg to move.

Lord Palmer: My Lords, I have put my name to the amendment because I believe that we have the opportunity to make a major step forward in achieving our national aims of cutting CO2, improving local air quality, increasing the sources of supply of road fuels and boosting the productivity of our farming sector at an affordable cost. I remind your Lordships that I am the unpaid president of the British Association for Bio Fuels and Oils, more commonly known as BABFO. I know how disappointed the noble Lord, Lord MacGregor, is not to be able to speak to the amendment.
	The United Kingdom is moving towards a position of net imports of road fuels. World prices are also rising. Brent crude has been close to 30 dollars per barrel for some time. Political uncertainty in areas where we have to buy oil makes it sensible to build a domestic industry from our own sustainable resources. I cannot think how many times in this Chamber I have mentioned that North Sea oil will not last for ever.
	In today's climate with world terrorism, a degree of self-sufficiency must be welcome. We still import 18 per cent of our petrol products. That figure is due to rise by 2 per cent this year.
	As the noble Lord, Lord Carter, mentioned in Grand Committee, at present about half a million hectares of land lie idle under set aside—a scandalous waste of a natural resource. A similar area of land has been arable and could be brought back into cultivation for fuel. Such a move would be a major national gain in productivity, as the agricultural overhead costs relating to that land are effectively already being met by existing businesses. Such a productivity gain should be attractive to the Chancellor.
	The Treasury has already provided a 20p per litre rebate for biodiesel and the same is promised for bioethanol by 2005. However, that is simply not enough to provide the kick-start to the industry that we need as biofuels cost twice as much as fossil fuels before VAT and duty.
	I find that one of the most depressing things is how, once again, this country is being left behind by our European partners. Indeed, the noble Lord, Lord Ezra, mentioned what is happening in Brazil. Other countries are far and away advanced in technology, in usage and with a more relaxed tax regime than we are in this country.
	One of the reasons I feel so strongly about this is, as a farmer in Scotland, I discovered by chance that my oilseed rape was being exported to Austria and Germany and made into fuel. If they can do it, why cannot we?
	Everybody I meet is lost as to why the Government will not embrace this with open arms; every countryside body supports it; every farming body supports it; every environmental body supports it; and all the farming press support it. Only last week, two well respected magazines mentioned this very amendment. One even had a half-page form for farmers to fill out and send to their MP.
	All this leads one to believe that biofuels should no longer be left in the wilderness and just to confirm that, on 11 March the other place debated biofuels. It is one of the most interesting and informative debates I have ever read in the other place. I wish I had time to quote all 36 columns from Hansard. Every speaker, from all sides of the House, argued the case for biofuels in a most constructive manner. All speakers, without exception, were pro-biofuels. Indeed, the amendment we moved in Committee was even mentioned.
	In the words of the honourable lady, Mrs Spelman,
	"no one has dissented on the matter under discussion. This is quite extraordinary".—[Official Report, Commons, 11/3/04; col. 1741.]
	Indeed it is and I so wonder why. Yet it was sad to read at col. 1746 that the Minister said that the "case was persuasive" and yet the Government felt unable to support the amendment.
	The amendment would ensure that all the benefits I have described would accrue to the nation as a matter of certainty. I commend it to the House and hope that the noble Lord, Lord Whitty, will accept it. After all the years of fighting for this cause, we are so nearly there.
	I leave your Lordships with one final but perhaps vital thought. A tonne of fossil fuel not burned today is available for future use, but every tonne of biofuel not produced today is lost for ever.

Lord Dixon-Smith: My Lords, I hesitate to intervene in the debate not because I have any quarrel with the principle being enunciated but because I have something to say about the effectiveness of biofuels. There is no doubt that from an agricultural point of view the introduction of biofuels—be they bioethanol from wheat or sugar beet in this country or biodiesel from oilseed rape—is highly desirable. However, we should not assume that it will solve the nation's energy problems and that aspect concerns me.
	I will not bore the House with all the arithmetic, but let us put the problem in perspective. If all the land that is set aside in this country were used for the production of biodiesel, it would produce only 3 per cent of our annual consumption of diesel oil. That is all. If all the land in the country were put into the production of biodiesel, we would still have the most enormous deficit in fuel.
	That is not to say that such a contribution is not worth making. To the extent that biodiesel is carbon neutral, it is better than pure consumption of mineral hydrocarbon fuel, but we have a huge problem. The difficulty is that plants are inefficient converters of solar energy. If, for instance, one put the same area of land into photoelectrics—I know that the present economics make it impossible—we would produce 10 or 15 times as much energy. We need to think carefully about what we are doing when we are in the business of green energy.
	I do not oppose the policy—it is completely supportable—but we should realise that it can make only a marginal contribution to our national energy problems. I speak in order to make apparent the scale of those problems. They will not be solved by any easy measures and it is important to realise that the scale of the difficulties we face nationally and globally are far more severe than anything most people have begun to think about.

Baroness Carnegy of Lour: My Lords, my noble friend clearly believes that the people who advocate biofuels are over-egging the argument. Should all the set-aside land in the country be turned to that crop, and should we get 3 per cent of our energy from it, it would be wonderful because all that land is useless. In fact, it is a blot on the landscape and it depresses everyone.
	As the Minister knows, there is a great problem for farmers: they do not know in what direction they should go because the problems of the CAP are by no means solved. Farmers throughout the country are trying to decide how to react and to respond and it is extremely difficult to know what to do.
	From the agricultural point of view alone, to be able to produce a small amount of energy from crops grown for that purpose would be a great help. It would be an objective and eventually help us move away from our false position on funding. Doubtless, that funding will diminish in time if the EU can persuade its members thus. Therefore, the Minister should raise his head a little more when he goes sneaking into the DTI to be briefed on the Bill. It is not merely a question of how much energy can be produced.
	I want to counterbalance what was said by my noble friend Lord Dixon-Smith. He knows all about farming and will appreciate my comments. However, he was right to point out that it is not a huge part of the whole, but it is an important element and we are being extremely sleepy about it. I speak as someone who lives in an area where a great deal of rape is going to Europe to be processed in the way described by the noble Lord, Lord Palmer. It is extremely depressing.

Lord Tombs: My Lords, I support the amendment partly on its own merits and partly on broader grounds to which I shall turn in a moment.
	I would not write it off on the grounds of its limited contribution, as did the noble Lord, Lord Dixon-Smith. I believe that the contribution available from that amount of land from photovoltaic sources is far less accessible than what is proposed in the amendment. Therefore, I think it is worth doing.
	The broader aspect I wanted to tackle is that so far what is described as the Government's energy policy is really an electricity policy. It involves sources that substitute for conventional means of generating electricity. Electricity is a big polluter but it is not the biggest. The biggest polluters are transport and gas, to which no attention has been given. This is at least a toe in the door towards looking more broadly at other forms of energy which pollute. I commend that broader point to the Government's consideration. I would like to believe that they are thinking more broadly than the easy route that they have so far followed. I support the amendment.

Lord Carter: My Lords, in speaking to support this amendment I should also declare an interest as the unpaid vice-chairman of the British Association for Bio Fuels and Oils, or BABFO.
	I will come clean. I phoned the Public Bill Office on Friday afternoon to add my name to the amendment to find out that I was too late to do so. Even former Chief Whips get the procedure wrong occasionally.
	I will deal quickly with the points raised by the noble Lord, Lord Dixon-Smith. Nobody is suggesting that this is the answer to our energy problems. I wish to make two simple points. First, it would be useful if we could use land that is currently in set-aside. I will return to that point. Secondly, there is a proposal that all London taxis should run on biofuels. That would make a significant reduction to the rate of pollution in London.
	I moved this amendment in Grand Committee. As we have heard from the noble Lords, Lord Ezra and Lord Palmer, the amendment refines the arguments that were expressed then, so there is no need to repeat them at length. There is a very strong case for biofuels on environmental grounds, as they contribute to the reduction of CO2 emissions. Recent figures show that emissions in the field of road transport are increasing. That is the one area of activity where they are doing so. On economic grounds, it is very efficient. We are quickly meeting our environmental objectives. It provides a viable agricultural alternative to the rural economy.
	I will quote from the evidence that was given to the Environment and Agriculture Sub-Committee—EU Sub-Committee D—on which I sit. The committee is currently investigating climate change. We heard evidence from Sir David King, Chief Scientific Advisor to the Government. He said that we should support all sorts of technologies that will lead to reductions in carbon dioxide emissions. I said that the technology that he mentioned was for the long run, but a simple technology—the use of biofuels—is immediately available. He then said:
	"I do think, once again, that we need this broad menu approach. Biofuels across Europe is seen to be a big step forward in this way. We do have to recall just the one limitation here, and this is around the question of land use. If we are moving away from farming for food production, then biofuels might be a good way to move into land use".
	I said that very large areas of land with nothing growing on them at all which are in set-aside could be used for biofuels. He came up with a marvellous quote:
	"Biofuels are considerably smarter than set-aside, yes".
	As we are discussing agricultural alternatives, I hope the Minister will not use the example of the biomass of the willow coppice. This argument is now completely exploded. The mid-term review had made the future uncertain for farmers. The idea that they will put land into willow coppice and wait from seven to 15 years for a return is not in accord with reality.
	Since we met in Committee, there have been a number of developments. Friends of the Earth has had a meeting with interested parties. They produced some interesting ideas on tradable and levy-exemption certificates. Two members of BABFO, Wessex Biofuels and Wessex Grain, have done some extremely sophisticated modelling on the way that these might work. They point to the existing scheme in the electricity industry—renewable obligations certificates or ROCs. They have devised a simple mechanism that could be used.
	The feedback from those involved in informal consultation with the departments involved in biofuels—Defra, the Treasury, The Department for Transport and the Regions and the DTI—suggests that the current reluctance to commit to an obligation centres around the belief that an operable mechanism is not yet available, and that any commitment would prejudice the subsequent setting of UK biofuels targets.
	A simple obligation mechanism along the lines already operated in the electricity industry could be readily established and would allow a flexible and efficient incentive to future biofuels production and use across a range of future targets.
	While mandates and obligations are often assumed to have a similar application, they vary in one significant area. Where mandate requires a set action, effectively with no exception, obligation allows for non-compliance, but at a price. Although mandatory inclusion of biofuels would be superficially attractive to the Government as it would not be state funded, those mandated would have no choice but to obtain supply and pass on the cost. There is no clear incentive to do this efficiently, and no control over the cost, which would be passed on as "hidden taxation". In the case of obligation, the financial impact in the market is limited to the penalty on those not complying, and the proceeds passed to those who do comply as an incentive to increase supply. An extremely sophisticated financial model has been produced which could be made available to officials.
	There was a debate in the House of Commons in March where this was supported by all parties, and there was also an Early Day Motion which has had a substantial number of signatures.
	I am sure that my noble friend the Minister has been briefed to say that biofuels are one of a number of possibilities but we must await the outcome of a consultation. When will this consultation finish? Indeed, has it even started? The Government have known since July 2003 that targets stated by July this year are to come into effect in 2005. They have been extremely slow in getting that consultation started: I am not sure that it has started yet. Can my noble friend tell the House whether he would expect the results of that consultation to be available before this Bill completes its progress through the House of Commons?
	I understand the Government's difficulty in going all the way to support a mandatory obligation. There is another possibility, which is to have a permissive approach. This would put the principle of an obligation into the Bill, but allow the Government to determine the timing, percentages, and so on, by regulation—what might be called a "sunrise clause". As most of this will come from fields of rape, that is particularly apposite.
	I am sure that all of us who support the principle of obligation would be willing to discuss a more permissive approach in an amendment for Third Reading with the Minister and his officials. I hope that my noble friend can make some encouraging noises to that effect in his reply. We want to see a renewable transport fuel obligation in the Bill, but we are willing to discuss ways of achieving that aim which the Government would find acceptable.

Baroness Byford: My Lords, I thank the noble Lord, Lord Ezra, for putting forward this amendment, which we debated at great length in Committee. I do not want to cover all of the ground that various noble Lords have touched on today. However, I would like to pose some questions. This afternoon I hope that we can persuade the Government to take a step further in their view on this amendment. Even if they are not willing to accept it, perhaps they may give us some encouraging words and return to the issue at Third Reading. I hope that adding my voice to this amendment will have that effect.
	When this was debated in Grand Committee, the noble Lord, Lord Whitty, said that he had great sympathy for the arguments put forward. Later on, when talking about climate change objectives, he said:
	"Biofuels is clearly one of the few options in the short-to-medium term whereby transport could make such a contribution. It could also have some benefit, although relatively marginal, to air quality, as my noble friend Lord Carter said, and to agriculture and the rural economy".—[Official Report, 12/2/04; col. GC 541.]
	I would like to add my voice to the hopes experienced by the various people within the agricultural community. The noble Lord will not have been surprised at some of the headlines when the Budget was announced and there was nothing in it on this matter. Everyone was hoping to see headlines on 15 March announcing a "breakthrough in biofuels". Elliot Morley said that the Government would not support the renewable transport fuel obligation amendment to the Energy Bill. He added that any decision on implementing the directive, which lays down minimum targets for member states, would also be subject to public consultation. The noble Lord, Lord Carter, also spoke on that matter. I ask the Minister very directly when consultation is due to start, when it is due to finish, and how soon it will be in the public domain.
	The Minister will not be surprised that on 17 March, after the Budget, a headline in Farmers Weekly read:
	"Fuel fury from farming leaders".
	The farming community had very much expected something from the Budget. The publication stated:
	"Farming leaders have slammed Chancellor Gordon Brown for a 'short-sighted' view on biofuels and a hefty tax rise on red diesel".
	The vice-president of the NFU, Meurig Raymond, went on to say:
	"Today's budget leaves the fledgling biofuel industry in limbo . . . At a time of increasing public concern towards the environment and energy supply, the Chancellor's views on biofuels can only be seen as short sighted".
	I hope that the Government have taken those matters on board.
	I do not wish to repeat what everybody else has said, but I shall refer to the debate that my honourable friend Michael Jack introduced—I think that it was on 11 March, but I shall not disagree with the noble Lord, Lord Palmer—during which Caroline Spelman said:
	"However, it is worth noting that in January this year, the UK trade in oil was at a deficit of £37 million for the first time for more than 12 years, and that a deficit has been recorded showing a decline of £416 million from the previous month"—
	those are big figures—
	"So the situation is changing. That underlines the point that biofuels offer a strategic, if not immediately cheaper, alternative. That is another strong reason for their serious consideration".
	She continued:
	"Several Members have pointed out that biofuels give the Government an opportunity to reduce carbon emissions by offering a closed carbon cycle. According to British Sugar"—
	I am sorry that my noble friend Lord MacGregor is not in his place today, because I know that he would have spoken to this amendment—
	"a saving of up to 70 per cent. can be achieved through the use of biofuels".—[Official Report, Commons, 11/3/04; col. 1742.]
	I accept the interesting point raised by my noble friend Lord Dixon-Smith that, even if it happens, it would be only a small proportion. I do not think that any noble Lords present say that it will solve all our crises, but I come from an era in which we want to have eggs in many baskets. The figures that I have just cited explain why I think that this is probably one of them.
	In his winding-up speech, the Minister Mr Morley recognised the weight of support for the Commons debate but added:
	"A number of Cabinet Sub-Committees deal with energy policy and consider the issue of biofuels and the implementation of the energy White Paper, including this issue . . . We recognise that the biofuels directive can have an effect, although the targets are indicative—it should not be assumed that they are currently the Government's targets. Consultation will take place".
	Again, we in this Chamber get slightly frustrated in this regard. Not one department but several must deal with the matter; and consultation will happen but we do not know when. One thing about which we can be certain is when the Bill will have cleared this House. The Minister went on to say that,
	"although we could not support the form of the amendment tabled in the other place, the Government are not opposed in principle to some form of biofuels obligation for road transport . . . We will consider that as part of the process of consulting on the implementation of the biofuels directive. When that consultation is made public"—
	and I challenge the Minister as to when that is—
	"therefore, it will include the issue of an obligation, which will be welcomed by many Members".—[Official Report, Commons, 11/3/04; col. 1746.]
	That is where we are at the moment; again we are in this very unsatisfactory position, as we have been without this Bill going through the House. On certain aspects we are waiting for consultations to happen. We are being asked to legislate for something, yet we do not know the outcome of the consultation. Other noble Lords have said it; I shall not repeat it. I accept that the amendment would be only a small part, but from the point of view of farmers, the agricultural industry and others who are looking forward to using different technologies, if the Government do not respond more positively, this will be a wasted opportunity.

Lord Whitty: My Lords, I think that noble Lords know that I regard biofuels as an important contributor to the climate change objectives. They are among the few aspects that are almost instantly available in the context of transport's contribution, an otherwise difficult area where the problem is still escalating, which is not the case in other sectors, as noble Lords have said. Biofuels could contribute to the agriculture and transport sectors and help to achieve environmental diversity and security.
	However, the contribution must be seen as proportionate. The noble Lord, Lord Dixon-Smith, was perhaps too much of a wet blanket on the matter, but nevertheless we should recognise that it has a limited effect on the overall figures. The main way in which the industry and campaigners have argued that the Government should support the issue involves quite large tax incentives. We have already given 20p on biodiesel and bioethanol, which was confirmed for the next three years in the Budget. Although people will argue about the matter, that is roughly the same incentive as given, relative to the price of petrol and diesel, in countries that have done so much better in developing biofuels.
	We have already made some substantial moves, but there is the important development of the directive, as noble Lords have said. We will consult on the options for meeting the objectives of the directive. On timing, the Department for Transport will issue the consultative document after Easter. The normal 12-week consultation period will apply and therefore we will complete consultation around the summer. Given that we cannot do everything through fiscal incentives, we must consider the possibility of an obligation along the lines spelt out in the document, perhaps meeting some of the problems that simply adopting the terms of the amendment would create. For example, how would the obligation be policed? I assume that the main method of obligation is through the fuel companies. How would it be possible to impose such an obligation on companies not based in the UK when dealing with imported oil? What would be the best way of dealing with non-compliance and the question of who is committing the offence?
	There are a significant number of practical concerns about how we would implement an obligation. Nevertheless, it is one of the means whereby one could deliver the objectives of the European directive, whether or not we agree the exact percentages within it. We certainly intend to consult on the matter. Accepting the amendment would commit us to pursuing that method of delivering substantial use of biofuels and the details of the quantum specified in the amendment without addressing some of the practical objections.
	The debate in this House and elsewhere on the amendment and related matters is a useful precursor to the consultation exercise. However, it would not be appropriate for the House to persuade the Government to adopt the amendment as it stands before consultation is completed.

Lord Carter: My Lords, before the Minister sits down, perhaps I may ask some brief questions to seek clarification, even though we are on Report. If, by Third Reading, we were to persuade the Government that we could overcome the practical objections, and were able to produce an amendment that was permissive in the way that I have suggested—which would leave timing, percentages and so on in the Government's hands—would it include the principle of an obligation? I asked the Minister whether he could make any encouraging noises that would enable the Government to agree to the amendment or perhaps the approach suggested when the Bill reaches the Commons.

Lord Tombs: My Lords, before the Minister replies, perhaps I may refer to his comment that it is difficult to tax or to apply obligations to overseas-owned companies. Does he accept that in the electricity renewables obligation we do just that with French, German and American-owned companies operating in this country?

Lord Whitty: My Lords, yes, that is so when we are dealing with a limited number of suppliers and a limited number of channels into the electricity supply system whereas this obligation as drafted in the amendment would apply to a wide range of fuels. Therefore, it increases the complexity. I do not say that there is not a way round it but it is an important increase in the practical objections to the amendment.
	On my noble friend's suggestion, I am sure that my colleagues and I would be prepared to talk to noble Lords and others about this area. However, I do not think that we shall reach a definitive conclusion in time for the process within this House, and probably not the process within another place. We already have a date for Third Reading. In view of progress today, it may or may not be met. Nevertheless, it is not far off. We need to ensure that we have genuine consultation, without the Government having made up their mind. I am open to discussing any alternative amendment that the noble Lord, Lord Carter, or anyone else, brings forward. But anything which appears to drive the Government to one conclusion on this matter would be somewhat difficult. With that qualification, I shall be happy to talk to anybody.

Lord Ezra: My Lords, I thank all noble Lords who have taken part in the debate, including the Minister. All seem to be in favour of doing something along these lines. There has not yet been consultation on the directive, the results of which could lead to a conclusion on how the directive was to be carried out. This could take some time.
	None the less, before the Bill leaves this House it would surely be helpful if it made some provision on this important issue on which we have had two fairly lengthy debates. I am glad that the noble Lord, Lord Carter, supported by the noble Baroness, Lady Byford, put forward the suggestion about a more flexible amendment. The Minister was not sure about the timing. None the less, his response was that his door was open; he was ready to talk. I suggest, therefore, that we arrange a meeting between interested Peers and the Minister to devise an amendment—it can be brought forward at the next stage—which will not tie down the Government too much but which emphasises the importance which we all attach to this important issue. On that basis, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Ezra: moved Amendment No. 195B:
	After Clause 109, insert the following new clause—
	:TITLE3:"CHAPTER 4
	MICROGENERATION
	STRATEGY FOR MICROGENERATION
	(1) For the purposes of promoting and developing the use of new and renewable energy sources, the Secretary of State shall within twelve months of the passing of this Act publish a strategy for microgeneration ("the strategy").
	(2) In drawing up the strategy or any revision of the strategy the Secretary of State shall consider the role of microgeneration in—
	(a) reducing the emission of carbon dioxide,
	(b) alleviating fuel poverty,
	(c) reducing the need for reinforcement of electricity networks, and
	(d) ensuring security of supply of electricity.
	(3) In preparing the strategy or any revision of the strategy the Secretary of State shall consult such persons as in his opinions of producers of energy by means of microgeneration.
	(4) The strategy shall include such targets for the generation of energy by microgeneration as in the opinion of the Secretary of State are practicable and cost effective.
	(5) It shall be the duty of the Secretary of State to take reasonable steps to—
	(a) implement the strategy, and
	(b) ensure that any targets included in the strategy are met.
	(6) The Secretary of State may from time to time revise the strategy and any revised strategy may set new targets for the generation of energy by microgeneration and it shall be the duty of the Secretary of State to take reasonable steps to—
	(a) implement the revised strategy, and
	(b) ensure that any targets included in the revised strategy are met.
	(7) In this section the following terms shall have the following meanings—
	"new and renewable energy sources" means sources of production of energy from or by means of—
	(a) wind power,
	(b) solar power,
	(c) ground source heat,
	(d) micro combined heat and power systems,
	(e) micro hydro power, and
	(f) other low or zero carbon sources;
	"microgeneration" means generation of energy by means of equipment installed in, or for use by, a single unit or a small number of units of residential accommodation or office accommodation."

Lord Ezra: My Lords, Amendment No. 195B deals with a strategy for microgeneration. I declare an interest in the subject as I did in Grand Committee. I am interested in particular in the promotion of small-scale generation of electricity.
	I emphasise that those who are involved in microgeneration were extremely pleased that the Chancellor mentioned in the recent Budget that it was intended to reduce the rate of VAT on microgeneration equipment from 2005 onwards subject to current tests being carried out successfully. This is an important step forward.
	We consider that it should be complemented by another step: to devise a strategy for microgeneration development. When I moved a similar amendment in Grand Committee, the Minister said that he thought it unnecessary because the subject of microgeneration was being dealt with in a number of other ways. My response was that while that is no doubt the fact, it would be helpful if all these strands could be brought together in one document. It would help to focus attention. It would help to achieve what the Government attach great importance to; namely, to increase domestic energy efficiency.
	This equipment will be available towards the end of this year and during next year. The sale of increasing quantities of the equipment will help to achieve not only a great increase in energy efficiency in the home—it will enable electricity as well as heat to be produced—but will also contribute to a reduction in CO2 emissions. There is substantial scope for the sale of such equipment in the boiler renewal market. It amounts to about 1 million items per year. So there is a substantial prospect of great improvement in the efficiency of domestic energy consumption through the promotion of this type of equipment.
	The Government have already taken one step to promote this concept and I hope that they will be prepared as a second step to devise a strategy for microgeneration which will bring together all that is being done elsewhere, focus attention on the issue and enable us to go forward on the twin planks of government energy policy: to increase energy efficiency, in particular in the domestic market; and to reduce emissions. This development would help to achieve both objectives. I beg to move.

Lord Jenkin of Roding: My Lords, I added my name to the amendment because it seemed to epitomise what should flow from the final break-up of the Central Electricity Generating Board. So long as the CEGB was the primary producer of electricity, it was bound to consist of only large plants and huge transmissions lines, with the distribution that we know. Now that has gone. We are operating in a much freer market. There are opportunities for new technologies of exactly the kind the noble Lord, Lord Ezra, described in order to diversify the supply of electricity in this country.
	I believe that that is right. It needs to be a focused strategy. That is what the amendment seeks. That is why I was happy to put my name to it.

Baroness Miller of Hendon: My Lords, regrettably, time is running out. It was not helped by having two Statements. My noble friend Lord Jenkin and I were delighted to put our name to this important amendment.
	Noble Lords may remember that in Amendment No. 2 on Clause 1 on Report we included microgeneration in the many matters on which the Government are required to report annually. The amendment has been so well moved by the noble Lord, Lord Ezra, and supported by my noble friend that I need do no more than indicate my support.

Lord Whitty: My Lords, the noble Baroness is correct. Slightly against my advice, the House passed an amendment requiring us to report on a number of matters including microgeneration. Therefore, in a sense the first part of the amendment is already on the face of the Bill as it will leave this House.
	The second part deals with setting a target for microgeneration and a strategy for ensuring that targets are met. I am strongly in favour of the technologies of microgeneration of all kinds. They can contribute towards achieving targets for renewables and CHP, and the overall target for cutting CO2 emissions. That is why we have done a number of different things; I shall not go over all of them again.
	That is why we allowed the contribution of CHP to be reflected in talking about annual output and annual export declarations. We have established the Distributed Generation Co-ordination Group, included research for microgeneration and micro-CHP, and so forth. The Chancellor referred to micro-CHP and a possible VAT reduction, which is subject to effective validation. Therefore, one can see that there is a whole range of support.
	If, in addition to the broader objectives to which microgeneration will make a contribution, we want to impose a separate strategy, that will probably confuse the issue too far. We have a strategy for CHP to which micro-CHP will contribute. We have a strategy for carbon reduction more generally. I do not see the need for a "micro-strategy" to be set up as an alternative or separate strand. However, microgeneration—embedded generation of all sorts—will make a major contribution to the achievement of all our targets. But I cannot accept the second part of the amendment.

Lord Ezra: My Lords, I thank all noble Lords who have taken part in this short debate. I have noted very carefully what the Minister has said. The important point to emphasise is that this is a new technology. While we have supported CHP earlier, that is fine. But this is a new technology. The production of CHP in its microform is new. It is an area where we are leading in Britain, where every encouragement should be given.
	Some measure of encouragement has been given already by the Chancellor. We consider that further encouragement should be given. On that basis, I should like to test the opinion of the House.

On Question, Whether the said amendment (No. 195B) shall be agreed to?
	Their Lordships divided: Contents, 106; Not-Contents, 87.

Resolved in the affirmative, and amendment agreed to accordingly.

Lord Davies of Oldham: My Lords, I beg to move that further consideration on Report be now adjourned. In moving the Motion I suggest that the Report stage begin again not before 8.32 p.m.

Moved accordingly, and, on Question, Motion agreed to.

Zimbabwe

Baroness Park of Monmouth: rose to ask Her Majesty's Government what is their policy towards Zimbabwe in the light of the Commonwealth Heads of Government meeting in Abuja.
	My Lords, in March last year, I spoke of Zimbabwe as a country that until two years before was the breadbasket of southern Africa, with a sophisticated, successful economic and public infrastructure, with no race problem and blessed with the rule of law. The collapse of all that had brought inflation at 280 per cent and widespread poverty and misery—a humanitarian nightmare. One year on, inflation has reached 600 per cent and rising. The country does not have enough foreign exchange to pay for fuel, electricity, water, or raw materials for industry. Meanwhile, South African businessmen are buying up firms and plants at knock-down prices, in a process described as the cannibalisation of the country.
	People are eating grass; and a teacher's monthly wage might buy him one day's ration of mealie meal, but only if he is a member of ZANU-PF. HIV has wiped out whole families and black agricultural workers are disenfranchised and denied food. The plight of the African population is dire, not only because of starvation, but because they are defenceless against daily brutality and violence. The free press and the courts have both been destroyed. One aspect of Mugabe's rule that should give us concern is the youth militia, which was the subject of a powerful "Panorama" programme, and on which the regime is spending considerable sums. The Sierra Leone war left 50,000 dead, 500,000 homeless and 10,000 mutilated. In Zimbabwe, by decision of the state, all boys and girls from the age of 11 must join the militia. No one may move to tertiary education unless they have served in this force, and no one may train as a teacher or nurse if they have not gone through the camps. The camps are producing moral cripples, who know nothing but brutality and hate, and they will be a terrible legacy.
	In a powerful statement, Archbishop Tutu said what has long needed saying by an African about the deafening silence and denial of the African leaders. He attacks their policy of defending Mugabe to ensure the "sovereignty" of African nations, to find,
	"African solutions to African problems",
	and to resist the,
	"Use of human rights by Western nations to put Africa into shape".
	He said that the peer review system of the African Union will be,
	"A futile exercise if we are not ready to condemn human rights unequivocally without fear or favour, whatever the struggle credentials of the perpetrator".
	He said that there are no peculiar African rights, and what is happening in Zimbabwe is wholly unacceptable.
	I propose a course of action for Her Majesty's Government in the aftermath of the Commonwealth Heads of Government Meeting at Abuja. That course was foreshadowed by the Prime Minister's statement there, rightly rejecting charges of racism and neo-colonialism, when he said that Britain wanted change for Zimbabwe's black people who make up the majority of Mugabe's victims, as well as for the white farmers driven from their land. This is nothing to do with old-fashioned colonialism, it is simply to do with regimes that do not treat their people properly. I hope very much that he will ensure that the Commission for Africa shares this view, and takes active steps to enable OSCE-type observers to enter the country soon to assess the position. The Catholic Church in South Africa has done this, and has made a devastating report. Why do we hear nothing from the Church here? I am glad to see that a bishop is speaking tonight.
	I do not suggest UN observers, because that institution has proved powerless, or unwilling, to bring the issue of Zimbabwe to either the Security Council or the General Assembly in four years, and has allowed the block vote of the African Union to prevent any discussion in the UN Commission on Human Rights. What have Ministers said to the AU, while discussing the peace facility, the African Army, which we are to pay for from development funds? What have they said about Zimbabwe, what did the Prime Minister say to Colonel Gaddafi?
	Let us be under no illusion that observers must be on the ground soon. It will be useless to send them in a month before the next election. No elections can be valid until a free press is restored, the green bombers are disbanded, much of the Public Order and Security Act is repealed, and the many black farm workers who are disfranchised regain their vote. In a recent by-election, the MDC was unable to hold even one rally, and the tribal chiefs warned that anyone voting for the MDC would be evicted, and that they, the chiefs, would lose their jobs if the MDC won. Maize was distributed by government officials and—surprise, surprise—the ZANU-PF candidate, a retired air chief marshal, was elected. All confidence in the voting procedure has collapsed, and will have to be restored in a country that has seen every single one of the 58 opposition MPs attacked, threatened in their homes, tortured, and in two cases murdered.
	I urge Her Majesty's Government, working with the Commission for Africa, the United States, Denmark, Sweden and perhaps Holland, to begin to plan both for observers and for the urgent measures that will need to be taken, apart from economic support, to restore and maintain order in a country whose police is demoralised and whose judiciary has been decimated. If they can act eventually with the UN, the European Union and the African Union, so much the better. However, the EU/AU relationship is likely at present to make the European Union deferential to the very sentiments that Desmond Tutu has denounced, and to be concerned to follow a political agenda that would not serve the people of Zimbabwe.
	The same is true of the UN. A small group could work with DfID, the World Food Programme, the World Bank, and the NGOs including the Armani Trust, and such important figures as the African church leaders. Archbishop Ncube, in Bulawayo, and Archbishop Tutu in South Africa have spoken our against tyranny and have valuable non-political contacts at the grass roots. What is needed now is to follow Archbishop Tutu's campaign for the world to give the people of Zimbabwe the same support that it once gave for the fight against apartheid. If the Secretary-General of the UN cannot do that, there is something wrong with the UN.
	When Zimbabwe is freed from the present tyranny, it will need to rebuild and restore the sophisticated, non-racial infrastructure of skilled professionals that once made it such a successful country, and which could do so again. Many of those people sought asylum here. Many are former teachers, lawyers, nurses, doctors, and others with skills that we need. Unlike asylum seekers from Kosovo, Afghanistan or China, they speak good English, were educated in the British system, and came here because they had been arrested, often tortured and persecuted without redress, because they supported the opposition party or simply because they were natural leaders. Getting here was not easy, but they had the naive belief that England meant sanctuary as it had done for the Ugandan Asians and for many others fleeing to freedom in our long history. They thought that they would find sanctuary here—not so. First, we instituted a visa system. Under pressure, the Government agreed that no one would be deported back to Zimbabwe by force. However, asylum seekers, some of whom had been tortured but whose applications to stay had failed, often because of grossly inadequate legal advice, at once lost accommodation and benefits, were denied the right to work and, in 2003, were urged to apply for voluntary repatriation as the Home Office considered Zimbabwe a safe place. That letter was eventually withdrawn. Now they are merely told that they must at once leave the country. Where can they go?
	The Home Office argues that refugees should seek shelter in neighbouring countries. Very many do. But it is the most sophisticated and skilled, and the most threatened, who manage to come here—people such as the brave air force warrant officer who reported to the police after seeing ballot boxes being tampered with during the 2002 elections, and was promptly arrested and tortured. What are Her Majesty's Government doing to help small countries such as Botswana to deal with the influx of refugees? What pressure are they bringing on the United Nations to do something in the region and to monitor the often brutal treatment of refugees in the camps in South Africa?
	Zimbabweans here only want to work. They do not want benefits and they have real skills to offer. There are teachers among them who could be really valuable in inner-city schools where it is difficult for young black boys to resist the gang culture in favour of education. Indeed, the Home Secretary expressed that anxiety when he was the Secretary of State for Education and Science. There are mechanical engineers, clerical officers, people skilled in labour relations and in marketing, who could and should be working. When Zimbabwe is free and those who came here—many of them among the potential political leaders—return to their country, if they have survived their treatment here, what do you suppose their views on England will be? What will have happened to their skills?
	I urge the Government to recognise that these people have nowhere to go and to grant them either humanitarian protection or discretionary leave and, above all, the right to work. The Government should implement the recommendation of the House of Commons report in January this year that,
	"in the case of failed asylum seekers who are unable to return to their countries because of the human rights situation there, the Government should make appropriate use of the power to grant a temporary right to remain in the United Kingdom".
	This is something immediately within the power of Her Majesty's Government to do when so little else can be done for a suffering country. Let us have some joined-up government. The Home Office should not be frustrating our declared national commitment to helping Zimbabwe when and where we can. What is happening now is a scandal and a disgrace. It is also extremely short-sighted.

Lord Acton: My Lords, recent reports have it that Mr Mugabe plans to announce his retirement date at the ZANU-PF congress in December. I doubt it. Mr Mugabe has spent most of his life seeking and exercising power; such people do not retire easily.
	Another reason for my doubts is that in 1983–84 Mr Mugabe sent the 5th Brigade into Matabeleland. Its members massacred between 6,000 and 20,000 Ndebele and threw their bodies down disused mine shafts. They tortured, raped and beat the Ndebele people at will. I suspect that Mr Mugabe fears that if he gives up power the Ndebele may seek revenge on him.
	But supposing Mr Mugabe retires, the main contenders to succeed him are said to be Mr Emmerson Mnangagwa, Speaker of the Zimbabwean Parliament, and Mr John Nkomo, the ZANU-PF national chairman and Minister of Special Affairs. Mr Mnangagwa is Mr Mugabe's choice of successor, but Mr Mugabe's failure in every other respect makes this endorsement highly suspect. Mr Mnangagwa is not popular and in 2000 lost his parliamentary seat. He was at one time a singularly intimidating Minister of State for Security. I would fear a Mnangagwa presidency.
	Mr John Nkomo is Ndebele. I knew him in the early 1980s when he tried bravely to stop the Matabeleland horrors. We shared a love of horseracing and he visited me at my Harare home. I would cheer at the thought of the presidency of the John Nkomo of 20 years ago. But since his party, ZAPU, fused with ZANU-PF in 1988, he has helped take the decisions which have wreaked havoc upon Zimbabwe, as the noble Baroness has described.
	My former father-in-law, the late Sir Garfield Todd, once Prime Minister of Southern Rhodesia, said that he could never forgive Mr Mugabe for what he had done to good men like John Nkomo. A presidency of today's John Nkomo would be that of a man steeped in the horrors that ZANU-PF has perpetrated in recent years. Whether it is led by a Mugabe, a Mnangagwa or an Nkomo, this is a ZANU-PF regime, and ZANU-PF is responsible for Zimbabwe's tragedy.
	Britain's policy is, first, to give the people of Zimbabwe the chance to decide democratically whether they want to continue rule by ZANU-PF or prefer another party. Secondly, Britain generously pours food aid into Zimbabwe for the 7.5 million people at risk, something of which I am very proud.
	This is not a struggle between a former colonial power and a former colony. Britain and other concerned nations, especially the African giants Nigeria and, above all, South Africa, must work together. Britain's diplomatic goal must continue to be a truly democratic choice by the voters. Ultimately, this is not about a Mugabe, a Mnangagwa or an Nkomo; it is about the nearly 12 million people of Zimbabwe who have surely suffered enough.

Lord Blaker: My Lords, there is much bad news out of Zimbabwe but the Commonwealth decision was good news, not only because it rightly continued the suspension of Zimbabwe but because of the way in which it was reached. I understand that President Mbeke tried to persuade the African members of the Commonwealth to support Zimbabwe's immediate readmission. As we know, this was rejected and all of the African members of the Commonwealth supported its continued suspension.
	Does the Minister detect in that decision a change of mood among the African countries, away from automatic support of Mr Mugabe, because of the damage he is doing to the prospects of southern Africa? This was not the first time that President Mbeke had rallied the African countries in support of Zimbabwe. He did so in the Human Rights Commission of the UN and in the Non-Aligned Movement in Malaysia last year.
	The other piece of good news is the role of the bishops in Zimbabwe, to whom my noble friend Lady Park—whom I congratulate on securing the debate—referred, and the work of three other bishops who are busy spreading the word in neighbouring countries about what is really happening in Zimbabwe.
	As to the question of what should be done, we must clearly continue to press for an appropriate resolution in the UN Human Rights Commission, which is sitting at the moment in Geneva. A resolution proposed by the EU will be presented by the Irish representative.
	We should also use other forums to deal with the Zimbabwe problem. I still take the view that African problems should preferably be solved by African countries, especially in the light of the undertakings given by them in respect of good governance, the rule of law and human rights.
	But the developed world does have a role to play through international organisations. Before long, we shall hold the presidency of the European Union; we shall hold the chair of the G8 next year. Both organisations have the ability to influence the actions of African countries but so far there is little sign of their doing so. The time has come when they have a positive duty to do so apart from any question of self-interest.
	The economies of the SADC countries will surely suffer more and more severely the longer Zimbabwe is an economic ruin. Apart from South Africa from time to time, the SADC countries will not be good places in which to invest nor with which to trade. The G8 countries should make it clear to them that it is very much to their advantage to restore Zimbabwe to health.
	As to the third organisation, the Commission for Africa, which was proposed by the Prime Minister, can the Minister clarify whether its remit will cover Zimbabwe? If it does, noble Lords will wish it well. We will regard it as important, especially if it covers Zimbabwe. We will follow its work with hope and wish it success.

The Lord Bishop of Southwark: My Lords, I am grateful to the noble Baroness for the opportunity for your Lordships to consider the situation in Zimbabwe once more. Sadly, the latest information that we have received from Church sources in Zimbabwe tells of political crisis, economic collapse, social disintegration and a state of near despair.
	A fortnight ago a bishop from one of our linked dioceses in Zimbabwe spoke at my diocesan synod. He told of a government determined to continue in power and now supported by legislation. Any opposition is repressed by the Public Order and Safety Act, which prevents people demonstrating in any way, and the Access to Information and Protection of Privacy Act, which prevents people saying or publishing anything critical of the leader. The bishop spoke of a new generation being caught up in the power games through the use of National Youth Service training. Young people who fear going into the National Youth Service flee from their homes but there is no access to higher education without a certificate saying that the service has been completed. The result is the loss abroad of some of the best young people who will not return while the present regime is in power.
	The country can ill afford the loss of such talent because the economy is in a dire state, with shortages of raw materials and currency and the collapse of public services, except the army and the police. Food distribution has been politicised. People have to show the right party card to have access to supplies. The financial hardships are contributing to the disintegration of society, but this is made worse by the HIV/AIDS pandemic, which is now affecting one in five Zimbabweans.
	What is to be done? In December, the leaders in Abuja spoke of the desire to facilitate an early return of Zimbabwe to the councils of the Commonwealth, to promote national reconciliation and assist towards a return to normality and economic prosperity. It will be of interest if the Minister can indicate whether any progress has been made or is likely to be made in the foreseeable future. Noble Lords will quite understand that pressure from the British Government, as the former colonial regime, can easily be discounted by the Government of Zimbabwe and their allies. One of the disappointments of the past months has been the lack of challenge on the Government of Zimbabwe from the leaders of neighbouring African countries, particularly South Africa. They surely hold the key to the Abuja recommendations. Perhaps the Minister can indicate whether she has discerned any positive signs there.
	The sensitivity of the British Government's position is mirrored by that of the Anglican Church in Zimbabwe. The noble Baroness asked why we do not hear of the Church here. She is obviously not aware of the diocese of Rochester's action in breaking official links with the diocese of Harare because of the craven support its bishop has given to President Mugabe. Conversely, the three bishops of the twin dioceses with which my diocese is linked have been courageous in challenging the ruling powers. We have been supporting them vocally and financially. Yet their criticisms can easily be discounted as the unpatriotic words of puppets of a Church holding allegiance to the Church of England, the Church of the colonial power. It is conveniently ignored that today each province is independent and the majority of the Anglicans in the world are African, with clear minds of their own.
	I believe that it is in such people of all denominations in Zimbabwe that hope lies. On Saturday, in Southwark Cathedral there were some 50 Mothers' Union members from Zimbabwe. They inspired us with song and dance, but they inspired us even more with their stories of taking in of AIDS orphans, their help with primary health care, their teaching of the next generation, and their unofficial distribution of food and aid.
	Bishops may talk and preach, and they do; government Ministers may negotiate and pressurise, and they should; and progress often seems slow. But the future of Zimbabwe is hopeful because the MU members on Saturday are more typical of their fellow Zimbabweans than those who hold temporary power, and they and their children will be there helping with the task of nation building, when today's oppressive powers have gone to their reward.

Lord Skidelsky: My Lords, I thank the noble Baroness, Lady Park of Monmouth, for giving us a chance to discuss this increasingly tragic subject. Mugabe is on the way to establishing a fully-fledged dictatorship in Zimbabwe. Like any dictator he has abandoned the pretence of ruling through Cabinet or Parliament. The onslaught on the political opposition, the free press, and private enterprise has been cranked up. ZANU-PF militia and police batter opposition supporters in rural areas to death on a regular basis, newspaper editors are imprisoned for any criticism of the president or the Government, the legal system is unravelling. Just recently a law was passed allowing people to be imprisoned for 30 days without seeing a judge. Licensed torture by so-called "veterans" includes beatings on soles of feet, burning, electric shocks and sexual torture, including the rape of children. The Zimbabwean economy is in meltdown, with inflation, as the noble Baroness, Lady Park, mentioned, at 600 per cent, mass starvation looming, most farms abandoned and the few remaining commercial enterprises subject to illegal or pseudo-legal seizure.
	In short, Zimbabwe has become a classic example of the "failed" state. While academics and, indeed, Kofi Annan himself demand a "right to intervene" to prevent humanitarian disaster, the international community has done almost nothing to bring this particular disaster to an end. The EU travel ban on Mugabe and his henchmen is full of holes. The EU refuses to impose economic sanctions as,
	"this would have a negative effect on all Zimbabweans".
	Until now the strategy has been to encourage constructive dialogue between Mugabe and the Opposition. But it is as plain as a pikestaff that Mugabe is not interested in national reconciliation or constructive dialogue with anyone. In December, he showed his contempt for the Commonwealth, which had suspended Zimbabwe, by quitting the organisation voluntarily.
	Her Majesty's Government have a particular responsibility in the matter, for reasons that I need not elaborate. In my submission, the time has come for much tougher measures and I would urge tougher measures than noble Lords have previously been prepared to contemplate. I should like HMG to go to the UN Security Council for a Chapter VII resolution, on the ground that the Mugabe Government is a threat to regional peace. Certainly a combination of starvation and state criminality is highly destabilising. I would favour a resolution that would call on Mugabe to give up, say within six months, the power that he fraudulently obtained in the election of March 2002 and has been using to ruin his country ever since, to be followed by elections for a new president and parliament under international supervision. If the Zimbabwean Government reject this, the Security Council should apply the measures allowed under Article 41, which include,
	"complete or partial interruption of economic relations . . . and other means of communication, and the severance of diplomatic relations".
	As a final step, which I mention only with great reluctance, Her Majesty's Government should suspend food aid. Reprisals by the regime against Zimbabweans and foreign nationals would be treated as criminal acts for which officials would be held responsible and brought to trial. That is the punitive part.
	At the same time we should be ready to offer Mugabe an exit strategy. In return for giving up power, he and those on the EU's named list should be given a guarantee of immunity from prosecution and a right of sanctuary. Why should we not construct a modern St Helena—assuming that the original is no longer available—as a place of exile for deposed tyrants? At least it would give them an incentive not to hang on to power for ever as the only way of escaping criminal prosecution and it would also avoid the embarrassment of having to ask someone to take them in. The conditions of such a retirement home could be made reasonably pleasant, with courses of lectures in political science and healthy outdoor activities.
	To return to the seriousness that the topic demands, unless we improve on the puny measures that we have taken so far, the slide into horror will continue and we will bear a large share of the responsibility.

The Earl of Caithness: My Lords, I am grateful to my noble friend Lady Park for again giving us the opportunity to debate this important subject. In the past four years we have debated it quite a lot and in the past four years Zimbabwe has moved from a prosperous county to a failed African state. GDP is down 40 per cent and is still declining rapidly, probably by 10 per cent this year. Three and a half million people have fled the country: at least 2 million have gone to South Africa, where they now dominate the shanty areas and threaten South African stability. Infant mortality and maternal mortality are at record levels.
	It was in Abuja in 2001 that the African leaders signed up to a programme on AIDS, saying that it was an epidemic that needed urgent attention from everybody. Yet AIDS has continued to increase. It is in epidemic form and is being spread by forced migration, poverty and a collapse of the health services.
	AIDS is Zimbabwe's largest export. Deaths from AIDS are running at 3,000 a week and, together with normal deaths, have seen a decline in the national population by 2 per cent per annum, and a decline in life expectancy to 36 years—down from 59 years in 1990. The death rate is becoming similar to that resulting from the plagues which ravaged Europe in the mid-1600s.
	Current economic problems have been made worse by the recent steps by the state to criminalise the activities of the foreign exchange and gold markets. Twelve out of the 17 commercial banks are in dire straits and at least four have failed.
	What does this mean in real terms? Let us take, for example, the situation of a girl born today. She has a one in four chance of dying by the age of five. Her mother has a 16 per cent chance of dying in childbirth. She has less than a 30 per cent chance of going to school. She has a 60 per cent chance of becoming HIV-positive before the age of 18. On average, she will not live beyond 32 years of age. It is more than 50 per cent certain that she will flee the country and try to make a living elsewhere. That is the human situation in Zimbabwe now.
	Part of the problem in Zimbabwe is compounded by the President of South Africa. In Abuja in 2001 and in 2002, the graveyard for President Mbeki was dug and, sadly, he went into it. He is no more worthy to be considered a great African leader, let alone a world statesman. What he has done is to the huge detriment of the whole of southern Africa.
	The situation today is somewhat similar to the situation in the mid-1970s, when Smith was in power. The then President of South Africa, President Vorster, told Mr Smith the realities of life, and what he did was for the benefit of South Africa. Mr Mbeki has not told President Mugabe the realities of life. It has taken the South African Communist Party to point out the home truths to their own president.
	May I ask the Minister what has happened to the committee established at Abuja to examine a way forward, comprising Australia, Canada, India, Jamaica, Mozambique and South Africa? May I also ask the Minister what has happened with the IMF compulsory withdrawal procedures over Zimbabwe's failure to pay its arrears?
	President Mbeki has quite deliberately let Zimbabwe down. The cynical are saying that it is because he wants the South African businesses to be able to buy up the Zimbabwean businesses on the cheap.

Lord St John of Bletso: My Lords, I join in thanking the noble Baroness, Lady Park, for introducing this important debate. It is now all the more important that, following the news blackout in Zimbabwe, this issue is raised in a public forum, and it is particularly gratifying that it is again being raised in your Lordship's House.
	I recently returned from a few days' visit to South Africa, where I was fortunate to be able to hear at first hand the post-Abuja views on Zimbabwe of several political, media and business leaders.
	For several years I have advocated an African solution to this African problem and have maintained that megaphone diplomacy from this country has had a limited effect so far. To a large degree, this view was founded on certain high-level assurances I received last year from within the region that a deal had been brokered to move Mugabe into a ceremonial role, and to install a new prime minister by changing the constitution, which would lead to a government of national unity to start rebuilding the nation.
	In view of my recent discussions, however, I believe that we can no longer stand by and watch the fast-deteriorating situation while we wait for this promised deal to materialise. I entirely agree with the approach of my noble friend Lord Skidelsky. It is now more essential than ever for Britain to rally her partners in the European Union and to press the United Nations to pass a resolution that unequivocally condemns the total and repeated breach of human rights in Zimbabwe. I feel that such a move would increase the pressure on other African leaders, particularly President Thabo Mbeki of South Africa, to take a firmer hand.
	We must not underestimate the gravity of the situation in Zimbabwe. We must ensure that the last four years of horrendous events in this decimated country do not produce a kind of mental fatigue and an uninterested shrug of the shoulders. Yes, we have heard these stories before and, yes, the situation continues to deteriorate.
	There is no doubt that the news blackout has been an effective tool for the Mugabe regime. It is not only people around the world who now have no clear picture of what is happening: even Zimbabweans living in the cities are oblivious to what is happening around them. Daily breaches of human rights go unreported; appropriation of food aid by officials of the ruling Zanu PF goes unreported; anarchy and mob rule go unreported. Day by day, this country of enormous potential slides into chaos, and poverty has become endemic.
	Mugabe retains his grip on power by ingratiating the party and military elite by giving them confiscated farms. Rumours that Mugabe is seriously ill continue to circulate, but I am reliably informed that, despite a bout of mild food poisoning several weeks ago, the President remains in fairly good health.
	President Mbeki of South Africa remains a central and key figure in the search for a solution. His inexplicably meek and mild attitude towards Zimbabwe at the recent CHOGM meeting in Abuja was alarming, particularly in contrast to the strong stand of President Obasanjo of Nigeria. Indeed, Mbeki's approach is almost impossible to reconcile with his status as an architect of NePAD. Mbeki has occasionally talked tough, but his policy remains soft diplomacy.
	As long as President Mbeki sits on the fence and tinkers at the fringes of the issue, Mugabe will remain unmoved. Some suggest that the origins of his caution might lie in South Africa's general election next month but this is hard to believe, since the ANC is running at 70 per cent in the polls and his re-election is assured. President Mbeki's stance in Abuja was in part based on the premise that Britain had reneged on its agreements to bring about land reform in Zimbabwe. But the Lancaster House agreement clearly stipulated that farmers would be paid in return for their land. That is the key issue. No one disputes the need for land reform. I still believe that we are approaching the endgame in Zimbabwe. Let us take action now to bring about a satisfactory solution and quickly.

Lord Avebury: My Lords, we have heard a number of constructive suggestions in this short debate. I want to concentrate on a matter where the Government have a direct responsibility; that is, the continuation of the investigation by the expert panel into the illegal exploitation of natural resources in DRC in which the Government of Zimbabwe had a despicable role to play.
	The Security Council urged:
	"all States concerned . . . to take appropriate steps to end these illegal activities, by proceeding with their own investigations".
	That is a legal obligation under Article 25 of the UN Charter. I ask the noble Baroness: have the Foreign Office and the security forces been working to implement that undertaking? It was alleged that Oryx, a UK company, was used as the vehicle for plundering the diamond resources of the DRC by the Zimbabwe defence forces, who were offered mining concessions in return for their co-operation in the DRC civil war. They pursued those interests through Osleg, a company incorporated in Harare in December 1998. The directors included the permanent secretary for defence, Job Whabira, and the ZDF commander, General Vitalis Zvinavashe.
	In November 1999, Osleg entered into a partnership with Comiex, a DRC government company, to form Cosleg, which became the owner of 98.8 per cent of shares in Sengamines, a company formed in Kinshasa on the same day. That company was awarded an 800 square kilometre concession to mine diamonds in the neighbourhood of Mbuji-Mayi, one of the richest deposits in the whole of Africa.
	Oryx was brought in to carry out the operations. A prospectus for a reverse listing on the London market by sale to a Bermudan company, Petra Diamond Ltd, stated that Oryx Zimcon had been "given" the concession. The flotation was called off because the regulatory authorities had made it clear that a London listing was unacceptable for a company involved with the Zimbabwe military in the exploitation of diamonds in a zone of conflict.
	Will the Government ask those authorities what information they had on file to see whether that threw more light on the transactions which led Oryx to obtain the concession and what stake the ZDF still had in the operation? Have the Government seen the "documentary evidence" that Oryx was being used as,
	"a front for the ZDF and its military company Osleg",
	and that,
	"Osleg nominated Oryx to hold its 49 per cent interest in Sengamines"?
	If not, will they take steps to obtain it?
	Oryx brought a libel action against the Independent in respect of an article published by the newspaper in November 2002. Last Thursday it was announced that the two sides had agreed to settle; effectively Oryx had climbed down. The courts had ordered it to produce documents that could have established the connection with the ZDF. The only way that it could avoid that was to settle. Will Ministers ask the company for those documents or an explanation as to why they were not produced?
	This is an opportunity to provide Africans and particularly our Commonwealth partners with evidence that the 11,000 soldiers who were sent to the DRC—and many of them did not come back—were there to generate profits for the military kleptocrats in the worst traditions of colonialism.

Lord Howell of Guildford: My Lords, we are all extremely grateful to my noble friend Lady Park for securing this debate as part of the unending and marvellous fight that she maintains for justice in the unhappy country of Zimbabwe.
	I have stood at this Dispatch Box so often pleading for a stronger policy and for stronger action against the Mugabe regime, and especially against those bankrolling Mugabe's hideous and illegitimate rule; and I have pointed so often, as have my noble friends, to the obvious failures of quiet diplomacy and the feebleness of the South African leadership, again referred to this evening; and we have warned so often that the Harare principles are being flouted and disregarded, ironically in Harare, that repetition of these points, which have all been touched on by my noble friends, seems almost useless and in vain. In the few minutes available, it would probably be better and more useful to confine myself to four precise and practical points about government policy towards this tragic area and arena.
	First, our foreign policy today seems to lean so heavily on the European Union, I shall begin with the EU Commission—the supposed driving force of Union policy. Do the Government see the Commission as playing a more effective role in resolving the Zimbabwe crisis? We have the EU/Africa ministerial meeting and the EU/SADC conference coming up, and lots of preparations by officials in the mean time. So what proposals will we be putting forward to increase the pressure on the ZANU-PF thugs and their manipulators? Will we suggest improving the targeted sanctions, which the noble Lord, Lord Skidelsky, rightly said are full of loopholes? Have we raised—this is a new suggestion—the question of South Africa cutting off the electricity supplies from Eskom, which supplies all the electricity in Zimbabwe? Eskom briskly cuts off non-payers in South Africa in the townships—they are blacked out quickly enough—so why not the non-payers in Zimbabwe? That really might bring the regime to its senses fast enough. It was used previously by China against North Korea and it certainly brought that country to the negotiating table, so why not consider that?
	Secondly, what about pressure at the UN, which my noble friend Lord Blaker and the noble Lord, Lord Skidelsky, raised? There is an EU resolution before the UN Commission on Human Rights, which is very strongly supported by the MDC leadership and, I believe, by Ireland. Is it now possible to detach some of the usual bloc African vote at the UN and gain support for this? It is becoming increasingly clear that many African leaders are fed up with Mugabe and the disastrous impact he has on the whole of southern Africa and its development. Or why do we not propose a UN regional conference on the crisis? There must be ways forward without getting bogged down in the UN labyrinth of disagreement.
	Thirdly, I return briefly to the role of Libya. The noble Baroness, Lady Amos, said this afternoon that Libya's role in supporting Mugabe had been raised when the Prime Minister met the eccentric Colonel Gaddafi. Raised—yes, but is it being followed up? What is now proposed? Does Mugabe's access to oil still depend on Libya or has it been or will it be stopped? Or was that something that was just left hanging in the air? I am quite surprised that those very urgent matters did not figure more prominently in the Prime Minister's report on his visit this afternoon.
	Finally, I turn to that cricket tour matter which has rather gone out of the headlines now that it seems to be inevitably going ahead next month—to my personal shame. The other day the noble Baroness, Lady Symons, became—could I call it, a wee bit irate? She spoke strongly, shall we say, when someone suggested that the Government could do a sight more to have halted the tour, which is now going ahead. I still cannot understand why the Government did not simply point to the appalling security situation—which is obviously getting worse by the day—and give the English Cricket Board cover for calling off the tour. If she could explain when she winds up why that did not happen and why, sadly, the tour is going ahead, I would be grateful.
	I have little hope that any of these suggestions will be heeded, despite all the protestations about helping Africa, despite all the commissions and despite all the fine rhetoric that comes from ministerial sources. But if this debate leads to some of these issues being examined it will achieve something in an appalling and increasingly dangerous and shameful situation.

Baroness Symons of Vernham Dean: My Lords, I thank the noble Baroness, Lady Park of Monmouth, for introducing today's debate on Zimbabwe. As the noble Lord, Lord Howell, said, she has been a strong and very faithful friend to the people of Zimbabwe for many years, as she demonstrated so eloquently again this evening. I congratulate all your Lordships on dealing with such an important subject in such brief and cogent terms.
	The Government's objective for Zimbabwe has not changed. We want to see the early return of a democratically accountable government who respect human rights and the rule of law while pursuing sound economic policies aimed at alleviating the suffering of the Zimbabwean people.
	The political, economic and humanitarian crisis inside Zimbabwe continues to deepen, as many of your Lordships described. In response, we and our partners in the international community are doing all we can to increase the pressure on the ZANU-PF regime to enter into a process of dialogue with the opposition, as a first step towards finding a solution to the enormous problems besetting the country.
	As we have heard again this evening, there are many who say that in the face of this deepening crisis Britain should speak out more loudly and that we should make our outrage at the situation in Zimbabwe felt at every turn. That was very much the tenor of the contribution of the noble Lord, Lord Howell. It is very tempting to say "yes" to the noble Lord, Lord Howell, and to say "yes" unequivocally. But your Lordships need to be very clear about why we do not do this.
	The fact is that we have very real responsibilities in Zimbabwe. We have the responsibility of our colonial history, which is at the same time the force that binds us to the interests of the people of Zimbabwe and also the burden in the current situation—because President Mugabe attempts constantly to use that for his own ends. We have to stay fully engaged, as the right reverend Prelate said, but we must never play into President Mugabe's hands when he tries to point at the United Kingdom as the cause of Zimbabwe's woes, or, worse, when he portrays our interests—our deep sense of concern for the people of Zimbabwe—as the selfish interference of the white former colonial power. That is why we are working so strenuously with our international partners; South Africa and Nigeria stay engaged and we strongly encourage their efforts. But—and it is a very big "but"—it is of course enormously disappointing that they have not previously supported us on a UN Commission for Human Rights resolution. We hope that they will seize the opportunity presented to them again this year.
	We need our friends in the region to live up to the high standards of humanitarian concern and care that the United Nations and the Commonwealth espouse, so I agree very much with what the right reverend Prelate the Bishop of Southwark said, and I remind the noble Baroness, Lady Park, that UN action can be taken only with the consent of the nations in the United Nations, in which South Africa and Nigeria are key players. I say very gently to the noble Lord, Lord Skidelsky, that the question is not whether Zimbabwe would respond to a UN resolution, but whether we could get that UN resolution, and whether in attempting and failing to do so we would give some terrible comfort to Mr Mugabe.
	In current circumstances, I think it very unlikely that the point of the noble Lord, Lord Howell, about electricity being cut off or light failing to go into certain homes in Zimbabwe would be taken up. If noble Lords had difficulty getting the right words on paper, how much more difficult will it be to get the right action on the ground? I am afraid that I thought that the noble Lord, Lord St John of Bletso, was right when he said that the attitude of African governments will be absolutely crucial in this argument. I disagree with what the noble Lord, Lord Howell, said. The repetition of such points is absolutely vital; we cannot repeat them often enough. In this Parliament, and very particularly in this House, the arguments are repeated over and again. Even if we are not successful, they are still worth repeating.
	I shall move on to the meeting with Mr Gaddafi. The Prime Minister raised our concerns, as my noble friend pointed out this afternoon, and we shall follow up the discussions. However, as has been pointed out in this House before, very often such matters are better done quietly rather than being blazed through loudspeakers.
	Last month, in our effort to build up our international consensus, the EU showed its determination to keep the pressure on Zimbabwe's leadership when it agreed to continue its targeted measures for another year. Despite the points made by the noble Lord, Lord Skidelsky, we were able to get a reasonably good result. Indeed, the list of those targeted by the travel ban and assets freeze has been extended from 79 to 95 people. Those who have been added to the list include several of the individuals who bear very particular responsibility for the abuses of human rights in Zimbabwe, such as those responsible for the closure of the Daily News and the hounding of other independent media, those closely associated with the fraudulent elections which have become the rule in Zimbabwe, the leader of the so-called war veterans, and the new set of Ministers appointed by Mugabe in his most recent reshuffle on 9 February.
	I assure the noble Lord, Lord St John of Bletso, that the UK Government have been a consistent advocate of a robust EU approach on Zimbabwe. We believe that the EU has sent a clear message to the government of Zimbabwe that we want to see an end to economic mismanagement and repression and a return to democratic government which respects human rights and the rule of law. The MDC has certainly welcomed the new EU measures, and described them as,
	"a clear indication that the international community will not fold its arms while the regime in Zimbabwe continues to trample upon people's basic needs".
	Much has been said about the human rights situation, which is very grave and continues to deteriorate, as the noble Baroness, Lady Park, and the right reverend Prelate reminded us. As the noble Lord, Lord St John of Bletso, said, we have seen repeated use of draconian legislation to crush the independent media and silence democratic voices. Zimbabwe's only independent daily newspaper, the Daily News, remains closed, leaving the daily print media, like the broadcast media, a government-controlled monopoly.
	The noble Baroness spoke of last month's "Panorama" programme covering Zimbabwe's national youth training programme. It was indeed a truly horrifying account of the militarisation of Zimbabwe's youth and an insight into how it is being exploited to meet ZANU-PF's objectives. The UK and our EU colleagues have made it clear that we expect to see the disbanding of that training programme. Although there seems little hope of that at this stage, the documentary clearly hit a nerve in the Mugabe regime, because last week saw the arrest of an independent film-maker in Zimbabwe who has been wrongly charged with having helped to make it.
	Earlier this month, we also had the report Playing with Fire, which stated that 90 per cent of opposition MPs had been subjected to human rights violations since 2000, including 24 per cent who have survived assassination attempts, and 16 per cent who have been tortured. I am sad to say that three died following such disgraceful treatment.
	A further worrying development has been the passage of a new regulation which will allow the Zimbabwe authorities to hold people in prison without bail for 28 days before bringing charges—a point made by the noble Lord, Lord Blaker. Opposition figures described the new regulations as the "imposition of a state of emergency by stealth". Quite clearly the Government of Zimbabwe are devising new powers for themselves to make it easier to stamp out all legitimate opposition.
	The UK, with our EU partners, has been at the forefront of the international condemnation of these abuses in Zimbabwe. We will continue to press South Africa and other countries in the region to raise their voices in condemning the regime for its appalling record on human rights. As Archbishop Desmond Tutu said recently, and the noble Baroness, Lady Park of Monmouth, reminded us, democracy and human rights are not western values, they are universal values. Zimbabwean citizens are as entitled to benefit from them as citizens elsewhere. I have mentioned that we are taking forward another motion at the UN Commission on Human Rights, which is currently meeting in Geneva. We will be lobbying hard in support of that resolution.
	The Commonwealth Heads of Government met in Nigeria last December and agreed, by consensus, to continue with Zimbabwe's indefinite suspension from the councils of the Commonwealth. That decision was right for the Commonwealth and right for the people of Zimbabwe. It reaffirms the Commonwealth's commitment to its core principles of good governance, enshrined in the Harare Declaration. The Prime Minister gave a full account of those events in another place on 9 January.
	The Commonwealth's decision was not made by white neo-colonialists, as Mugabe would have us believe, but was reached by a committee of six Commonwealth leaders—Australia, South Africa, Jamaica, Canada, India and Mozambique—which considered the whole of our approach. The noble Lord, Lord Blaker, asked whether there had been any change in the heart of some African countries on such issues. I can tell the noble Lord sincerely that the jury is out. Regarding the noble Lord's point about the UN Commission on Human Rights, which is currently meeting in Geneva, we will be lobbying hard on that, but we have faced disappointment in the past and we shall be watching closely to see what happens. We shall be looking at who does what on this issue.
	My noble friend Lord Acton was right to ask us to concentrate on the 2005 elections. For those to be seen as free and fair and for the results to be accepted as reflecting the will of the Zimbabwean people, we will need to see a change in the wider political environment to ensure that the ordinary people can vote freely and that the opposition, civil society and independent media are allowed to function without fear of violence and intimidation for a significant period in advance of the elections. In that respect the UN has a role to play in monitoring Zimbabwe's elections. I am sorry to say that when the UNDP offered to send an assessment mission to Zimbabwe, the government withdrew their request for its monitors. Quite clearly they do not want the elections to be subject to external scrutiny. But I assure the noble Baroness and those of your Lordships who have expressed concern that we will continue to push for independent monitoring. That will be essential if the results of the elections are to be accepted as reflecting the will the Zimbabwean people, freely expressed.
	The noble Earl, Lord Caithness, painted a terrible, but, sadly, accurate picture about the humanitarian situation in Zimbabwe and I thank my noble friend Lord Acton for his remarks about UK efforts in our aid for the people of the country. An appalling statistic that I will give your Lordships is that the EU cares for more people in Zimbabwe than their own government, as seen by the fact that the EU has donated humanitarian assistance worth £184 million between 2002 and 2003. Within the EU, the UK is by far the largest bilateral aid donor to Zimbabwe and the second largest overall, after the United States. We have contributed some £65 million in humanitarian programmes since September 2001. We are continuing our efforts on HIV/AIDS prevention and have set aside £20 million for that over the next five years.
	Latest estimates are that up to 7 million Zimbabweans will require food ahead of next month's harvest. This year's harvest is unlikely to provide even half the food needs of the population, mainly due to lack of seeds, fertiliser and agricultural inputs. It is a tragedy for a country that, up until a few years ago, was able to export grain to its neighbours. It is now the fastest shrinking economy in the world. I draw to your Lordships' attention that we are worried that the grain might be used in advance of next year's elections as a political lever. Again, we have raised such questions with the Zimbabwean Government through our multilateral fora and shall continue to do so. We shall also continue to work with the European Commission, the US and the World Bank to consider how we can best get Zimbabwe back on its feet once democratic government has been restored.
	I want to address briefly the points raised by the noble Baroness, Lady Park, about asylum. I know how passionately she feels. She chaired a meeting on the issue last month which was attended by officials from both the Home Office and the Foreign Office. The statistics show that we are giving protection to Zimbabwean asylum seekers who come to the UK—some 870 in the recent period since 2003.
	If an application is refused, there is a right of appeal. Should the right of appeal prove unsuccessful, that means that for the individual a return to Zimbabwe is assessed to be safe. But as the noble Baroness knows, our view at present is that it is inappropriate forcibly to return individuals to Zimbabwe. That is why, as a result of our concerns about deterioration, towards the run up to the presidential elections we announced the suspension of the removal of those returning to Zimbabwe.
	I know how passionately the noble Baroness feels about the matter. There is not time to go into all the detail that I might have wished, but I will make sure that her remarks go before my right honourable friend.
	There is a good deal to say on the points raised by the noble Lord, Lord Avebury. I know how strongly he feels about them and he was kind enough to give us some advance warning. We have made repeated requests to the UN to release the information relevant to UK companies and individuals that was collected by the panel to which he referred. A formal letter requesting that information has been hand delivered to the office of the legal adviser at the UN in New York and we are awaiting a reply. I shall write to him in further detail on those points. I shall write to your Lordships about the Commission for Africa, which was raised by two noble Lords.
	We have had our exchanges on the question of cricket. I believe that we all have responsibilities and that no one can exculpate themselves from those responsibilities—that was the point I was making in the House the other day. It is the point I make about the cricket board, the Government and the Opposition. I hope that the noble Lord, Lord Howell, speaks as passionately to his friends on the cricket board, if he has them, as he did just now in the House.
	We are looking to be actively engaged with our international partners. We want the return of a democratic and prosperous Zimbabwe. We will continue our efforts. I know that there are differences in the House about how we do that, but I hope that there is no difference about the sincerity of what we are trying to do. We may vary in our analysis of the best approach, but I hope that I have been able to convince your Lordships that in the Government there is a strong determination not to let the issue go off our agenda or from the agenda of the multilateral fora to which we are affiliated.

Energy Bill [HL]

Further consideration of amendments on Report resumed after Clause 109.

Baroness Miller of Chilthorne Domer: moved Amendment No. 195C:
	After Clause 109, insert the following new clause—
	"LIFTING OF LIMITS ON THE SUPPLY OF PRIVATE WIRE
	Notwithstanding any statutory provision to the contrary, there are no numerical limits to the supply to domestic customers of—
	(a) the use of private wire in Combined Heat and Power generation or renewable energy systems; and
	(b) surplus power from public wires from local community sustainable energy systems."

Baroness Miller of Chilthorne Domer: My Lords, in moving the amendment I shall speak also to Amendment No. 195D. The amendments seek to discover a little further than in Grand Committee why the Government feel they need to limit so strictly the community generation of power and the breaking down of barriers that that sector of power generation faces and to cover the issue of metering.
	On the first issue it is perhaps unfortunate that the timing of the Bill's passage through your Lordships' House is in advance of two European sub-committees, one of which is examining climate change and the other issues related to Amendment No. 195C; the generation of power supplies by community organisations.
	The sub-committee recently took evidence from Woking Borough Council about the difficulties it faced having brought in an innovative scheme to undertake the community generation of power, including combined heat and power, for the benefit of Woking residents. However, the council found that not only did it have to install a private wire system to supply its customers, but also that the use of the system was numerically strictly limited. When the report from the EU sub-committee is published, it will illustrate better than I can why the Government need to pay more attention to current restrictions and why they are detrimental to the Government's aims in this policy area. The first amendment therefore seeks to explore who benefits from the imposition of these strict, new limits.
	The second amendment requires a wider explanation from the Government as to why they have not used the Bill to introduce the concept of net metering. In the wording of the amendment, I tried to explain that net metering involves both buying in from the National Grid and contributing to it, as one would with a micro-generation plant. Both activities should be at the same price. Currently, if you buy in from the National Grid that is set at one price, but generating and selling to the grid is at a severely disadvantaged price—several pence less per unit.
	The effect is that individual householders have much less incentive to undertake more micro-generation. I appreciate that the renewables obligation will enable them to receive some cheque at the end of each year and that the Government grant aid for capital expenditure towards the purchase of items such as photovoltaics that would enable generation. Nevertheless, the fact that householders can sell into the grid only at such a reduced price must be a disincentive to taking responsibility for investing in and using renewable forms of energy. I should be glad to hear from the Government in whose interests are the restrictions and limitations that they have chosen to keep in place rather than using the Energy Bill to change the situation. I beg to move.

Lord Whitty: My Lords, on the second amendment, the Government have recently allowed small generators to be issued with renewable obligation certificates on the basis of their annual rather than monthly output. That helps anyone who has a small generator to gain a few ROCs every year. That will come into effect from 1 April and it will benefit householders, for instance, who have installed a photovoltaic frame in the roof of their house.
	We have therefore taken some steps in trying to help, but simply to net off electricity ignores the fact that electricity is priced differently at different times of the day and that the way in which it would be calculated would not necessarily lead to a straightforward netting off. Indeed, it could lead to some distortion in the supply to the National Grid and the price paid to the small generator. The answer is not as simple as the amendment would suggest.
	I understand that the first amendment, which is complex in its effect, is designed to help CHP. In relation to minimising the regulatory burden on small generators, we must ensure that the security of the system is not imperilled and we must also minimise the potential adverse effect on individual consumers. So when the noble Baroness asks in whose interests we act, it is in both of those interests—which, ultimately, is in the interests of consumers.
	We undertook widespread public consultation on the class regimes for electricity exemptions until October 2001 and made significant changes. Although I understand that the balance may be argued about, it is a substantially better balance in that a private network operator may now distribute up to 2.5 megawatts of electricity to domestic customers, which may supply about 2,500 households, and an additional 1 megawatt may be provided where a generating station is embedded in the distribution system. Although the exemptions regime remains concerned with the security of the system and the protection of the consumer, that additional 1 megawatt for embedded generation is most likely to assist local CHP operations and will therefore benefit them as well.
	The Government did not require, as some had recommended, that private networks provide all domestic customers with third party access—that is, access to the competitive market—but we took the view that the 2.5 megawatts, together with the 1 megawatt allowed for distribution from embedded generation, represented a level beyond which it would be inappropriate to deny access to that market. It is of course entirely open to any operator to supply a greater number of domestic customers, but it must do so, like any other domestic operator, under licence. Ofgem can then consider what licence conditions should apply.
	However, the point that we reached in 2001, while maintaining security of supply and the interests of the consumer, provides some benefits to small generation and small CHP generation in particular. We are not convinced of the argument for going further than that at this stage.

Baroness Miller of Chilthorne Domer: My Lords, I thank the Minister for that reply and was certainly aware of the Government's move involving individual householders and the renewables obligation certificate, as I was in your Lordships' House leading from our Benches on the order last week. However, I still thank him for reminding the rest of the House about that move. Nevertheless, that is a welcome but small move that does not overcome the need for net metering. When the Government come to consider the issue more substantively, they will realise over the next few years that, if they are as truly interested in the outcome—that is, reducing carbon emissions to the atmosphere—as they say they are, they will increasingly find that individual households and communities acting together are the most powerful way to do so.
	Therefore, although I shall not press the amendments this evening, because they have not yet come of age, if you like, because they have not garnered support from the Conservative Benches either, it is in the power of the individual and individual communities to affect our future. So it is with regret that I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.
	[Amendment No. 195D not moved.]

Lord Jenkin of Roding: moved Amendment No. 196:
	Before Clause 110, insert the following new clause—
	:TITLE3:"CHAPTER A1
	COAL MINE METHANE
	SCHEME FOR THE PROMOTION OF COAL MINE METHANE
	(1) For the purposes of promoting and developing the use of coal mine methane the Secretary of State shall within six months of the passing of this Act make regulations to establish a scheme, to be called a feed in tariff scheme, for the generation of electricity from coal mine methane.
	(2) A feed in tariff scheme is a scheme whereby the Non-Fossil Purchasing Agency or such other body specified by regulations made pursuant to this section shall have a duty pursuant to those regulations to purchase electricity generated by means of coal mine methane.
	(3) Regulations made pursuant to this section—
	(a) shall include provisions that specify any price or prices at which the Non-Fossil Purchasing Agency or any other body specified by regulations shall purchase electricity pursuant to this section;
	(b) may in particular specify any other body to which subsection (3) applies; and
	(c) may contain such incidental or supplemental provisions as in the opinion of the Secretary of State are necessary to enable the operation of the feed in tariff scheme.
	(4) Regulations made under this section are subject to the negative resolution procedure.
	(5) In this section "coal mine methane" means methane from abandoned coal mines."

Lord Jenkin of Roding: My Lords, the amendment stands in my name and that of several noble Lords in different parts of the House. We have discussed coal mine methane on several occasions in the House and had a good debate in Grand Committee, but I fear that I must remind the House what we are on about.
	Coal mine methane is a hazardous gas. It escapes into the atmosphere from active and disused coal mines. Those emissions are the responsibility of government, which took over the liability for abandoned mines from British Coal when it was privatised in 1994. From now on, I shall talk about emissions from abandoned coal mines.
	Coal mine methane has a global warming potential 23 times greater than carbon dioxide. That is to say that you would need to trap 23 times more carbon dioxide for each tonne of methane. Therefore, capturing this waste gas for generation cuts its global warming potential by over 100 per cent and saves nine times more CO2e—that is, CO2 equivalent—per kilowatt hour than wind power. It is a clean, strategic source of energy with the potential to contribute up to 450 megawatts of generation capacity by 2010. That would be the equivalent of hundreds of wind turbines.
	In Grand Committee we moved an amendment to accord renewable obligation status to coal mine methane, on the grounds that we have hundreds of years of coal availability in this country from abandoned mines. That has already been said in the debate today. We need to avoid the seepage of methane into the atmosphere. In Grand Committee I mentioned Arkwright, a village in Derbyshire, that had to be evacuated because it became uninhabitable as a result of methane leaking into the atmosphere. Our other argument was that, as the Germans have given RO status, we should do so too.
	The essence of the Government's reply was that coal mine methane is not a renewable—if all the coal were to be dissolved by microbiotic action that that would be the end of it. They said that methane is not a clean fuel and there would be some emissions from generating power from it. They argued that it is not measurable, and I shall return to that point later.
	The strongest argument that the noble Lord, Lord Whitty, put forward was a familiar one that we have already debated today—that if they got help it would undermine long-term renewables objectives. That is absurd. I dealt with that earlier and am not going to do so again.
	They went on to say that the Germans are doing this differently. In Committee on 1 March, the noble Lord, Lord Whitty, said that the Germans,
	"are doing it by means of a system which they refer to as a 'feed-in tariff', which results in favourable pricing of the methane connection into the system".
	Later, he said:
	"The feed-in tariff is not state aid because effectively no money is foregone or provided to the coal mine methane sector. Therefore it does not fall foul of state obligations".
	When the noble Lord, Lord Williams of Elvel, listened to the argument, he interposed:
	"I have listened very carefully to the debate and I feel that noble Lords opposite have a point. Why can we not do what the Germans do regardless of the renewables obligations?".—[Official Report, 1/3/04; col. GC 174.]
	That is the question to which we return this evening. Amendment No. 196 is an effort to respond to the suggestion that the noble Lord, Lord Whitty, made on that occasion that we should do what we can in the way that Germans have to get round the issue of state aid provision.
	Amendment No. 196 provides a power for the Government to make regulation for a scheme called a "feed-in tariff scheme". That is defined in subsection (2) thus:
	"the Non-Fossil Purchasing Agency shall have a duty . . . to purchase electricity",
	from the coal mine methane operators.
	So far that would follow the German model. However, I should offer an explanation of what is meant by a feed-in tariff: it sets the price at which a designated organisation is obliged—as we propose, by government regulation—to purchase electricity from a renewable or sustainable electricity generator. The purchaser could be the distribution network operator, the transportation grid operator or an independent agency. As I have already suggested, an example of the latter would be our own Non-Fossil Purchasing Agency (NFPA), which supervises the market in non-fossil fuel obligation contracts. The price at which the obligation would be exercised would encourage sustainable use of coal mine methane. It would be set for a fixed contract period, in order to be effective in building the industry and raising finance.
	The Non-Fossil Purchasing Agency was set up to act as an agent through which electricity suppliers contracted collectively with renewables generators. It would be possible to have a separate coal mine methane purchasing agency, but we do not suggest that; we suggest that the existing body, the NFPA, should do that. The system would work in the same way as the German one does. The German experience is that creating a framework where a premium is paid for CMM capture allows private industry to build projects that mitigate huge amounts of methane. They do not require knowledge of the absolute quantities being emitted. The German Government have recognised that CMM emissions were a major global and local hazard, and that something had to be done about them.
	During the debate on innovation, my noble friend Lady Byford referred to the other argument with which one has been faced. When she raised the issue, she was told by the noble Lord, Lord Sainsbury, that the amounts would be very small and therefore not worth doing. What are the facts? In 2003, member companies of the Association of Coal Mine Methane Operators captured 765,000 tonnes of CO2 equivalent—one divides that by 23 to get the tonnage of methane trapped. An equivalent 574 megawatts of wind turbines would be required to achieve the same output.
	The noble Lord, Lord Sainsbury, was most woefully misinformed. I, and others, who have been meeting Ministers to discuss the subject for over two years, have formed the impression that, for reasons best known to themselves, Defra officials have steadfastly set themselves against any fresh support for CMM. In Grand Committee, they refused a renewables obligation. That is very well; we have moved on from that and taken the hint from what the noble Lord, Lord Whitty, said during the debate. We have opted for a variant of the German scheme and tabled an amendment that would introduce a feed-in tariff. It has worked well in Germany, and there is no reason why it would not work here using an adapted NFFO structure.
	If all the effort expended by officials to prevent CMM development ever taking off in the UK could be put into finding a way of supporting the industry, surely a mechanism could be found. The methane is there; it is seeping into the atmosphere; it could be trapped, used and burnt to generate electricity. The idea that somehow one cannot give any more help to coal mine methane because it might frighten people off investing in wind power seems absolutely absurd. I beg to move.

Baroness Miller of Chilthorne Domer: My Lords, in supporting the amendment, I speak on behalf of my noble friend Lord Ezra. Due to circumstances beyond his control, he is particularly sorry that he cannot be present to support the noble Lord. They have worked together for a long time on the issue.
	The Government wish to reduce the amount of gases which go into the atmosphere contributing to climate change. The noble Lord, Lord Jenkin, has brought forward an amendment which should overcome those issues to which the Government objected in Grand Committee; namely, the fiscal incentives which were unacceptable to them. The amendment, therefore, is redrafted. We hope that it will achieve the outcome which noble Lords on all sides of the House seek and that the Government will accept it.

Lord Davies of Oldham: My Lords, the noble Lord thought that the Government might rely on some old arguments. It is not the function of the Report stage to reiterate arguments heard in Committee. I seek to follow the noble Lord on that. I shall produce only one old argument and two new ones. I shall also produce two negative arguments and one positive argument. I hope that the response will be sufficiently positive to encourage the noble Lord to withdraw the amendment.
	First, on the new argument, we are in straight conflict with the noble Lord. We do not accept his illustration that the success of the German model is one we should follow. Germany's feed-in tariff scheme for renewable energy has recently been reviewed by its federal economic ministry's advisory council which concluded that the scheme was expensive to the economy as a whole, would be lacking in environmental benefits once the EU emissions trading scheme is operational, and that it should be abolished.
	We made this point in Committee. The difference between the UK's support of renewable energy using the renewable obligation and the Germans' support of renewable energy via their market system reflects the fact that the German electricity market is far less liberalised than that of the UK. Therefore, its experience is not readily translatable to the scene here.
	I put forward an older argument which the noble Lord, Lord Jenkin, with his usual prescience has foreseen. He knows that I shall argue that such a feed-in scheme would conflict with the principles and objectives behind the Government's energy White Paper which underpins the Bill. If we introduced such a scheme for methane, it would be contrary to the White Paper's principle at paragraph 1.21 that,
	"we do not propose to set targets for the share of . . . electricity supply to be met from different fuels";
	and, secondly, at paragraph 6.7 that,
	"we will not intervene in the market except in extreme circumstances".
	A feed-in tariff for CMM would clearly conflict with both those principles.
	Such a tariff would also be more expensive for consumers as there would be no incentive to drive down costs such as there would be with a market mechanism and, as a clear market intervention, it would diminish the efficiency of our liberalised electricity market. I give way to the noble Baroness who is stopping me in midstream.

Baroness Byford: My Lords, indeed I am and I am sorry for doing so. However, if the Government have decided in this case that they will not interfere with the market, how is it that the market is being interfered with as regards wind farms?

Lord Davies of Oldham: My Lords, they are not. The renewables obligations are there. We have a target which we want to see achieved. That is recognised. What is sought here is a feed-in mechanism, a direct interference with the market. That is a different concept.
	Perhaps the noble Baroness would exercise a modicum of patience. I understand her eagerness to challenge me, but she challenged me as I was seeking to arrive at a rather more positive response to the proposals made by the noble Lord, Lord Jenkin. I should like a hearing on that front in the hope that the noble Lord and both Front Benches might think that we have made some progress. We have certainly looked long and hard at the way forward for coal mine methane.
	As I have indicated, we do not accept the feed-in tariff, but we propose to set up a new scheme to encourage industry to control emissions of coal mine methane. I hope that our proposed solution will commend itself to the House. The new arrangement will be a competitive grant scheme to be administered by the Coal Authority. It will provide an incentive to the private sector to control coal mine methane emissions through a competitive bidding process, leaving them to decide on the most cost-effective means of control—whether it be through electricity generation or by flaring the methane. We are considering what level of funding would be required, to be dispersed over seven years, to control the majority of methane emissions from the existing sites where it is possible to control emissions.
	That proposal is constructive, but it is at an early stage. In principle, it is considered to be the most effective means for controlling such emissions. It has the benefits that it would involve genuine competition with opportunities for industry participation; it is designed to reduce emissions cost effectively; it would fit with existing licensing constraints; and we could implement it fairly quickly.
	I hear what the noble Lord said about the extent of methane emissions. Our recent study—overseen by a project board that included the DTI, Defra, the Coal Authority and representatives from the CMM industry—reached the conclusion that methane is not quite as significant as it is sometimes made out to be. It concluded that only some 52 kilotons of methane are vented every year that could be controlled. That amounts to around 2.5 per cent of total UK methane emissions.
	Allowing for those sites that are already utilising methane, that falls to about 21 kilotons of uncontrolled emissions or 1 per cent of total methane emissions. Let us get some perspective on the scale of the issue; that is equivalent to just 0.07 per cent of the UK's total greenhouse gas emissions. I am grateful to the noble Baroness, Lady Miller, who, in her speech, emphasised the fact that our objective is how to reduce the emission of these noxious gases into the atmosphere. That is the scale of the problem.
	I hope that it will be recognised that we fiercely contest the argument that we could follow easily the German example. We maintain that interference in the market is something to be avoided if we possibly can. We have a constructive proposal for addressing the issue. We share with all parts of the House a commitment to dealing with that problem. On that basis, I hope that the noble Lord will think that I have responded positively enough for him to consider that he has made good progress with his general representation on the matter and that he will feel able to withdraw his amendment.

Lord Jenkin of Roding: My Lords, I am not sure how many Ministers the noble Lord, Lord Ezra, and I, and our colleagues, have met over the past three years, but it must be five or six. The noble Lord, Lord Davies of Oldham, is the first who has succeeded in offering any help to this industry. For that, one must express gratitude. I and, no doubt, the officers of the association will wish to study very carefully the words that he has used and to examine the figures that he has quoted. The noble Lord said that representatives of the association had taken part in this study, but I am not sure that they would necessarily endorse the figures that the noble Lord mentioned.
	Nevertheless, it would be very churlish of me to say, "We fear the Greeks even when bearing gifts". In this case, I am not sure that that would be right. The noble Lord really has moved to respond to the case that has been made over the years, which was made quite forcefully in Grand Committee.
	I express my gratitude to the Minister. Some progress has been made on this, and in these circumstances it would be wrong to press the amendment, as we had originally intended to do. We may want to return to the subject at Third Reading, when perhaps a little more will be known about the scheme that the noble Lord has announced this evening. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.
	Clause 111 [Power to modify licence conditions]:

Lord Gray of Contin: moved Amendment No. 196A:
	Page 90, line 30, after "systems," insert—
	"(aa) power to set an upper limit or a lower limit (or both) on the charges set by the holder of a transmission licence for the use of its system by persons authorised to generate or supply electricity under the 1989 Act; and"

Lord Gray of Contin: My Lords, in moving this amendment, I shall speak also to Amendments Nos. 196B, 198A and 198B, which stand in my name and are grouped together. These amendments have been tabled as fall back amendments, in order to provide an opportunity for some further discussion on the highly controversial subject of transmission charges.
	I took some comfort from a statement made by the noble Lord, Lord Davies of Oldham, when he responded to my amendment on this subject in Grand Committee on 12 February. Referring to figures that I produced to illustrate the extra cost to Scottish generators, he said:
	"But the figures relate to the current and first proposals and I have no doubt that there will be great toing and froing over the figures".
	A little later, he said:
	"I recognise that the figures are accurate but they will be under constant and ever-present negotiation over the next few months".—[Official Report, 12/2/04; cols. GC 573–74.]
	I am happy to say that this is absolutely correct. The major generators in Scotland have been meeting together and also meeting with the relative agencies, in an attempt to agree the form of words for an amendment to which they could all subscribe. The prize would be substantially to close the very wide gap that presently exists between those generating in Scotland, who would be substantially disadvantaged by the proposed changing methodology for access to the transmission system, and those who are already part of that system in England and Wales, and who would fare very much better. Indeed, without exception, they will all pay less.
	As I explained in Committee, all but two of those that are presently recompensed for using the system will actually receive more money. In sharp contrast, Scottish Hydro-Electric will face an increase from £5.44 per kilowatt to £20.69, or 380 per cent, while ScottishPower will rise from £2.45 per kilowatt to £11.28, or in percentage terms, an increase of 430 per cent. Clearly, this state of affairs cannot be allowed to prevail.
	Based on Ofgem figures, the Government have said that if the current approach was adopted, generators overall in Scotland would see a net reduction in their payments of £5 million. This is because of the removal of interconnector charges and connection charges and the opportunity for Scottish generators to earn revenue from the provision of balancing services to NGC as the Great Britain system operator. However, this does not consider the impact on individual Scottish generators. I give one example only. The impact of the current proposals on British Energy's Scottish generation assets would be an increase in charges of approximately £11 million, or 56 per cent.
	I do not wish to use this occasion to weary the House by going over the many details that I spelled out in Committee in support of my argument, but I feel that I must again make reference to the danger facing Peterhead power station in the north-east of Scotland. Peterhead enjoys the reputation of being one of the most efficient gas-fired power stations, not only in the United Kingdom but in Europe, and it will be crucial in coping with the closure of coal-fired stations and the intermittent nature of most sources of renewable energy.
	Under the proposals, it would pay 20 per cent of all the charges levied on generators throughout the United Kingdom. If the proposals are accepted, Peterhead may well have to close, which would put the Government's renewables policy at serious risk.
	I had hoped that the amendment being prepared by generators in Scotland would have been available by now. Regrettably, this is not so, although good progress is being made and it is possible that such an amendment may be available in time for Third Reading immediately after Easter. If not, it will have to be tabled in the House of Commons. I understand that the discussions have required a degree of compromise all round. I am very hopeful that a form of words will be tabled which will have the blessing of the Government as well as the generators. It is in everyone's interest that this matter is resolved soon.
	I understand that NGC will be consulting on revised proposals shortly, including a dampening of the locational element of charges that will lessen the impact on Scottish generators. However, considerable uncertainty still remains over the structure of the GB charges. This is not acceptable at this late stage in the process and NGC must urgently provide fuller information so that the companies can assess the commercial impact of its proposals. I beg to move.

Baroness Carnegy of Lour: My Lords, I support my noble friend, as I did in Grand Committee. This is a serious issue and a resolution has to be found. I shall not, of course, repeat the figures my noble friend has set before the House but I shall remind the House and the Government of why this is so important.
	When we discussed the point in Grand Committee, the noble Lord, Lord Davies, reminded us that the matter was still out for consultation. He quoted various figures, claiming that the costs to Scottish generators of the plans that the grid has at the moment were neutral. Scottish generators have obviously contested these figures—convincingly, it seems to me. I shall not repeat the arguments because the Minister knows them very well.
	To add to his argument, the noble Lord, Lord Davies, said in Grand Committee that the Government considered that Scottish generators will receive considerable advantage from the arrangements the Government have in mind to help renewables generators in remote areas. I understand we will come to that in Amendment No. 217H. The Scottish generators point out that it may well have the reverse effect to that envisaged by the Government.
	While, of course, anyone who is operating wind power—as the Scottish generators doubtless will be—will welcome that assistance, should it come, the amount of transmission lines which will be brought about by such generation will cost the generators a great deal. That extra expense in the transmission system will eventually reach the customers in increased costs. Does the noble Lord realise that a planning permission application has gone to the Scottish Executive for 300 windmills on the Isle of Lewis in the Outer Hebrides? They will supply 365,000 households, which is 1 per cent of total demand. There will be an enormous transmission cost attached to that electricity. The power from that island, which, as the noble Lord knows, is a long way out towards the Atlantic Ocean, will have to come across into Scotland and it will doubtless join the big line that is being set up from Beauly to Denny in Stirlingshire. That wind farm will add greatly to the cost of electricity in Scotland, even if the cost of the wind farm energy going into the system is reduced, as the amendment suggests. I am not sure why the Minister says that the Government will not intervene in the system as that is a big intervention. It is certainly one that those of us in Scotland will welcome.
	The noble Lord indicated that there was a lot of toing and froing between the generators and the Grid about this, which my noble friend also mentioned, and we hope that there will be a good outcome. But so far, there is no sign of one. Something has to be done to make sure that Scotland is not landed with very much more expensive electricity than other countries. Noble Lords may remember that in Committee, the noble Lord, Lord Tombs, described what it felt like when he was working for Scottish generators and went to negotiate in London. It was suggested to the people in London that they might meet in Scotland on one occasion. They said that Glasgow was a very long way away. The noble Lord pointed out that he came from Glasgow to London, the same distance as they would have to go from London to Glasgow. That is what it feels like negotiating in London.
	This Parliament exists for all the people of the United Kingdom—all the electricity users. As this negotiation goes on, the case of the south-east dominates the thinking. Surely this Parliament has the duty to provide a fallback provision in the Bill, to enable the Secretary of State to ensure fairness across the United Kingdom, whether by these amendments or by one that my noble friend may move later. This amendment is simply a fallback provision, a temporary measure available to the Secretary of State to cap or make transitional adjustments to what Scottish generators are required to pay and thus to what Scottish customers are required to pay. If the Government do not do something in this House, I think that they will have a difficult time in another place. I support my noble friend's amendment.

Baroness Byford: My Lords, I rise to speak to this amendment briefly. I am very grateful to my noble friend Lord Gray of Contin for explaining very clearly the reasons why he has brought this amendment back again. For anyone who was not in Committee, the figures he gave, and the way that it will affect Scottish power, must be mind-boggling. To go from £5.44 per kilowatt to £20.69 is a huge increase. The one thing that my noble friend has asked for is some form of certainty. If I understand him correctly, the position is that the individual companies do not know where they are going and it is part of the problem. My noble friend Lady Carnegy of Lour clearly supports this amendment and suggested that the Government's Amendment No. 217H may make matters worse.
	I should be very grateful if, when he replies, the Minister could reflect that particular issue. Otherwise, we shall not have the benefit of Amendment No. 217H until we reach it—when we need to be able to consider it in the light of this amendment. Perhaps the Minister could touch on it, if not in detail then with a broad brush, because I believe that my noble friends have raised important issues.

Lord Davies of Oldham: My Lords, in returning to this important debate, I am grateful to noble Lords. Of course we understand the concerns which underlie the amendments, and the way in which noble Lords have spoken to them with considerable emphasis.
	I have some difficulty with regard to Amendment No. 217H. Part of the difficulty is that cold water has already been poured on that constructive concession. On the other hand, the noble Baroness herself was looking forward to it with slightly more optimism. It is quite difficult for me to talk about an amendment which is not part of this group. I would be in great danger of ruling myself out of order—save to say that what we intend is to take on board the particular problems of specific areas in a limited way.
	I reject the overall arguments with regard to the Scottish position. While understanding where the arguments come from, we would seek to show just how we are involved in continuing discussions to resolve some of the issues.

Baroness Carnegy of Lour: My Lords, I am sorry to interrupt, but I want to make it plain that I mentioned the oncoming amendment only because the noble Lord used it as part of his argument when we were discussing these amendments last time.
	The Scottish generators very much took issue with that. I mentioned it only for that reason. The noble Lord need not talk about that amendment at this point. They used it as part of the argument, so I thought that I should include it as my noble friend had not.

Lord Davies of Oldham: My Lords, the noble Baroness is being more than kind in saying that I do not need to respond to it. She certainly raised the issue first. However, she will recognise that it was also raised with considerable force from the Front Bench, and I was seeking to respond to the duality of the representation. It is difficult for me to do so with regard to that amendment, except to trail the obvious point that we have accepted that there are difficulties in this area. The difficulties are sufficient to indicate that, in due course, we will be making a concession in that limited respect, while at the same time seeking to meet the main thrust of the noble Lord in moving the amendment.
	We think that the Scottish industry will gain and will lose, as we have indicated in Committee. After all, BETTA operates on behalf of the whole of the United Kingdom, brings the benefits of the market across the whole of the United Kingdom, and customers stand to gain from that competitive market. Nevertheless, we recognise that there are specific issues with regard to the Scottish position.
	The noble Lord was generous enough to indicate that there are very intensive, ongoing discussions on these issues. We are by no means at the end of the road and, at this point in time, I am not expressing anything in the way of categoric responses—refutations of the positions which he has adopted—save in the most general terms, which he will recognise that we defend.
	BETTA is a package of reform. Some elements will result in higher costs to the Scottish generators, as the noble Lord has been articulate in emphasising. Others, such as lower connection costs and the abolition of interconnector charges, will result in lower costs.
	The particular issue of Peterhead was mentioned. If an issue arose regarding guaranteeing local security of supply, the National Grid would need to enter into a contract with Peterhead. Perhaps other solutions could be found in the short term.
	We would expect such specific localised issues—when I say "local" I do not want to be disparaging, because I recognise how significant such issues are to the community—which are different from the more general position in Scotland, to be recognised. That point is well taken. I want that to be accepted as an earnest of our seriousness about having discussions that cover the particular issues facing Scotland.
	Noble Lords will recognise that the National Grid has been concerned in the consultation process to work out ways in which some of these issues can be tackled without infringing the broad principles on which BETTA is to be established. It is a nationwide market that will bring advantages to the whole of the country and all of the countries within the United Kingdom.
	Particularly in relation to Amendments Nos. 197A, 198A and 198B, I understand the argument about giving generators time to adjust to the increases in the transmission charge. At first glance that seems a very reasonable argument, which the noble Lord made with his usual reasonableness. However, that would discriminate against generators elsewhere and in England and Wales who would be competing in the same market. It just would not be fair for Scottish generators to receive the benefits of the national market of BETTA on day one but not pay the full costs. That would also delay Scottish consumers receiving the full benefits of BETTA.
	In Grand Committee we discussed just how severe those costs would be. As I sought to emphasise, and I do not resile from this position at all, while there may be acute difficulties in particular areas, the broad perspective facing Scotland is a fine balance of gains and losses. It is the noble Lord's right to emphasise the areas where there are clear losses. As he will recognise, my task is to defend BETTA's overall value in bringing universal benefits to which Scots will have access on an equal basis.
	In Grand Committee I disputed the noble Lord's figures, and I wrote to him to do the same. He produced some fairly devastating figures of his own. I hope he will recognise that, in arguing the general case, I am basing it on the best estimates of cost for Scottish consumers and generators. The whole purpose of BETTA, after all, is to bring the substantive benefits of competition to the whole of the nation.
	I hope that the noble Lord will recognise that we do not have a fixed position. Substantial consultation continues and will have a changing outcome in terms of the costs to be borne. I certainly am showing a commitment to the necessary flexibility, with which we can deal more properly in our later consideration of the Bill, about specific generators in Scotland and specific local problems. I hope that he will feel that he has once again articulated a very important area of concern, which has obliged the Government to respond by engaging in continuous consultation and negotiation in a situation that remains flexible.

Lord Gray of Contin: My Lords, I thank my noble friend Lady Carnegy of Lour for her remarks in support of my amendment. I also thank the noble Baroness, Lady Byford, for her help from the Front Bench. The Government can be in no doubt that we are fighting on a united front on this matter, but I also thank the Minister for the very courteous way in which, as always, he responded. The debate we have had on this group of amendments has been very useful because I am glad that the Minister confirmed that minds are not yet closed and that discussions are still taking place. It is to be hoped that, in due course, either at Third Reading or in another place, an amendment to which all parties can subscribe will be made to the Bill. I am most grateful to the Minister for what he said. It would be churlish to force this to a Division and in the mean time I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn
	[Amendment No. 196B not moved.]

Baroness Miller of Hendon: moved Amendment No. 196C:
	Page 91, line 8, leave out "that subsection comes into force" and insert "this Act is passed"

Baroness Miller of Hendon: My Lords, I would like to move Amendment No. 196C and speak to Amendments Nos. 197ZA, 198C, 203B and 208CA. They are all in identical terms and each seeks to alter the time limits in the sections to which they relate, from a period commencing with the date when the relevant subsection comes into force—whenever that may be—to a specific defined date; namely, to a specified date after the Act is passed. In each case, we have not proposed any alteration to the commencement period from that proposed by the Government. In the cases of Clauses 111, 114, 116 and 145, that is 18 months; and in the case of Clause 152, that is three months.
	Each of the clauses that we propose should be amended sets a limit on the time by which the Secretary of State can exercise the powers granted by that clause. Clauses 111 and 114 relate to the implementation of the new electricity trading and transmission arrangements by the modification of licences. Clause 116 is a power to give directions to Ofgem in relation to the grant or refusal of transmission licences.
	Clause 145 is a very wide power to modify or amend standard gas and electricity licences. Clause 152 relates to the modification of standard licences in relation to appeals from decisions of Ofgem, where the time limit of the Secretary of State to decide whether he wants any such modifications proposed by the Government is three months.
	We certainly do not argue with the limitation of the period in which the Secretary of State must exercise his powers under the respective clauses. We accept the length of the periods proposed by the Government. Our disagreement is only with the date from which that power should run. The Government, in each case, say that it should be from some unspecified date when the appropriate subsection comes into force, whereas we propose that the time should begin to run from the passing of the Act.
	Under the Government's proposals, these closely connected provisions need not even come into effect on the same date, because Clause 169(2) enables the Secretary of State to make different commencement orders for different parts of the Act. The five sections grant very important powers to the Secretary of State, and we do not quarrel with these. Nor do we disagree with the necessity provided for in these sections for adequate prior consultation before the powers are exercised by the Secretary of State.
	What we do not agree with is the fact that the Bill sets no clear date by which the wide-ranging executive power to implement the BETTA programme, or to modify licences relating to energy administration, or relating to appeals from Ofgem, must be exercised.
	The Bill will introduce a major overhaul of the power industry. Certainty is therefore what is required by those involved. I point out that the approach of the Government in the case of the BETTA programme is inconsistent with that adopted for what was called the new electricity trading arrangements (NETA) in the Utilities Act 2000, where time began to run with the commencement of the Act.
	The Bill has had a very long gestation period, beginning even before the White Paper, possibly even with the drafting of what became the Utilities Act 2000. The Minister may very well tell us that he expects the Secretary of State to set the machinery in motion on day one after the Bill is passed, and I sincerely hope so. However, there is absolutely no reason why the exercise of the Secretary of State's powers under the clauses should extend beyond a very generous 18 months, or in one case three months, from the passing of the Bill.
	The amendments will concentrate the Secretary of State's mind on bringing certainty to the power industry, which is very necessary. I beg to move.

Lord Whitty: My Lords, I understand the noble Baroness's arguments but, in practice, it would not be a sensible approach to shift the starting point for the time limit. As she said, the implementation of BETTA requires the use of a range of powers to change licence conditions. It makes sense for those to be time-limited—everyone accepts that—but only from the period that the commencement to use the powers starts. If, for example, a technical problem is found immediately prior to implementation, commencement would not begin until that had been sorted out. If the clock were already ticking, that could set back the whole BETTA project if the matters could not be resolved before the time expired.
	The noble Baroness asks why the provision is different from those under the Utilities Act. With this provision, we are of course bringing in a new regime, which could introduce greater complications, some of which we discussed on the previous amendment. By bringing the whole Scottish system into the English system, greater complications could arise in the technical drafting of regulations. I therefore think it sensible that the commencement date start from when the regulations are introduced.
	Amendments Nos. 203B and 208CA deal with the special administration regime. Clearly we would expect to bring that regime in as soon as possible after Royal Assent, but we need to retain the flexibility to deal with any consequences of the introduction of BETTA, in respect of special administration and appeals. For those practical reasons, I hope that the noble Baroness will not press the amendment.

Lord Jenkin of Roding: My Lords, the Minister did not acknowledge my noble friend's central argument, which was that the provisions generate significant uncertainty for the industry, as it is affected by all the clauses. Can he say anything that might help the industry to recognise exactly how the powers will be used and when, to use his phrase, the clock will start ticking?

Lord Whitty: My Lords, the uncertainty and its resolution relate to the drafting of the regulations and their precise details. My argument is not that an industry does not need certainty as rapidly as possible; clearly it does. However, if we start the clock ticking immediately on Royal Assent and if the drafting of the regulations, which will of course have to be quite widely consulted on, leads to greater complexities and then time runs out, that will be doing the opposite of creating certainty. We would have been consulting on regulations, 99 per cent of which people might agree with, but which for one technical reason could not go ahead on the date that the legislation would by then have proposed.
	The danger of that is greater in relation to BETTA than it was in relation to NETA. I was going to say that that was because of the Scots, but noble Lords know what I mean. We are bringing two regimes together, whereas previously we were simply modifying the regime under a new structure and regulator. It does not help the certainty issue to give a closing date—a deadline—that may be before the sensible time that it takes to finalise the regulations.

Baroness Miller of Hendon: My Lords, I thank my noble friend for repeating what I tried to say about certainty being the essence of what was needed for the power industry. It is hopeless when there is no certainty. I understand exactly what the Minister is saying; he need not look so worried, because I will certainly not divide the House.
	It is absolutely imperative in my opinion, however, that the Government settle down and get everything done as quickly as possible. That is the issue. The trouble with leaving matters to unspecified dates until regulations are introduced is that that could be at Christmas, spring next year or whenever. The truth is that had the Government been willing to accept such an amendment easily, which I what I had hoped for, that would have concentrated their minds to make progress with the consultation and the regulations and then be able to complete the job. However, in view of what the Minister has said, I want it on the record that we feel that it is unfair that the industry should be uncertain. At this stage, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.
	Clause 114 [New standard conditions for transmission licences]:

Lord Davies of Oldham: moved Amendment No. 197:
	Page 92, line 26, leave out from "under" to end of line 27 and insert "Part 1 of the 1989 Act, or
	( ) under this Act,"

Lord Davies of Oldham: My Lords, in moving the amendment I shall also speak to Amendments Nos. 201 and 203. They are designed to refer to all of the provisions that allow for modification of standard licence conditions and are simply the correction of a small drafting error. They ensure that standard conditions, on an ongoing basis, include modifications under both the Electricity Act and the Energy Bill. Accordingly, I hope that the House will support these small drafting amendments that seek to improve consistency in the Bill. I beg to move.

On Question, amendment agreed to.
	[Amendment No. 197ZA not moved.]
	Schedule 17 [Conversion of existing transmission licences: licensing scheme]:
	[Amendment No. 197A not moved.]

Lord Davies of Oldham: moved Amendment No. 198:
	Page 211, line 6, leave out "desirable" and insert "to be necessary or expedient"

Lord Davies of Oldham: My Lords, never let it be said that we are not a listening Government when sensible arguments are put at any stage of a Bill. We listened to the significant representations that were made. They were not unduly protracted, but were made with considerable force and argued that we should make a change because noble Lords were concerned that the power in this paragraph would provide for the tearing up of,
	"any agreement or code that the Secretary of State thinks it desirable".—[Official Report, 24/2/04; col. GC 72.]
	That would be a terrifying power and is not one that we have ever intended. We indicated in our response that the power was restricted to a narrow purpose—that is, when a change is needed to an agreement or codes as a consequence of changes to a transmission licence for the purpose of BETTA.
	However, it was clear that there was great anxiety in Committee over this issue and we were pressed to come back with a different form of wording. As ever, we have considered those representations with the greatest of care and have tabled an amendment that brings the language in line with the drafting in the other clauses relating to BETTA—that is to say, from a "desirable" test to a "necessary or expedient" test. Noble Lords will recognise how enormously grateful I am for the advice that was proffered on that last occasion. I beg to move.

Lord Jenkin of Roding: My Lords, at the risk plagiarism, may I tell the Minister I am enormously grateful to the concession he has made and it greatly improves the Bill? It makes the whole Grand Committee procedure worth while.

On Question, amendment agreed to.
	[Amendments Nos. 198A and 198B not moved.]
	Clause 116 [Grant of transmission licences]:
	[Amendment No. 198C not moved.]
	Schedule 18 [Property arrangements schemes]:

Lord Davies of Oldham: moved Amendment No. 199:
	Page 217, line 10, leave out paragraphs 21 and 22.

Lord Davies of Oldham: My Lords, the amendment again fulfils a promise that we made in Committee. Considerable criticism was made of the contents of paragraphs 21 and 22 in schedule 18. This amendment removes them. I beg to move.

On Question, amendment agreed to.

Lord Woolmer of Leeds: moved Amendment No. 200:
	After Clause 121, insert the following new clause—
	:TITLE3:"Exemption of nuclear and large scale hydroelectricitygeneration from climate change levy
	EXEMPTION OF NUCLEAR AND LARGE SCALE HYDROELECTRICITY GENERATION FROM CLIMATE CHANGE LEVY
	(1) The Climate Change Levy (General) Regulations 2001 (S.I. 2001/838) are amended as follows.
	(2) In regulation 47(1), leave out "provided that it is not electricity generated from a large hydro generating station".
	(3) In regulation 47(2)—
	(a) in the definition of "generator", leave out "except in the definition of "hydro generating station" below,"
	(b) in the definition of "hydro generating station", leave out "other than stations driven by tidal flows, waves, ocean currents or geothermal sources",
	(c) leave out the definition of "large hydro generating station",
	(d) in the definition of "renewable sources"—
	(i) leave out "or nuclear fuel" and insert ",",
	(ii) at end insert "and also includes nuclear fuel".
	(4) Nothing in this section affects the power of the Commissioners of Customs and Excise to make or amend regulations under section 30 (climate change levy) of and Schedule 6 (climate change levy) to the Finance Act 2000 (c. 17)."

Lord Woolmer of Leeds: My Lords, at this late hour I shall be brief. First, I give the apologies of my noble friend Lord Lea of Crondall who has sat through much of three days of Report stage and unfortunately as we reached this amendment was unable to be with us. I extend on his behalf apologies for absence.
	Her Majesty's Government are firmly committed to a national goal of a 20 per cent reduction in carbon dioxide emissions by 2010. I am sure that we wish them well in that ambition. However, as well as being a tax on energy, the climate change levy, introduced in April 2001, is, I presume, intended to contribute towards reducing carbon dioxide and other greenhouse gases. There is common agreement that nuclear power for electricity generation results in no carbon emissions or other greenhouse gases. The same goes for hydroelectricity.
	Common sense appears to be that nuclear power for electricity generation should not have to pay the climate change levy; yet it does. A quarter of all climate change levy revenue is collected from nuclear power-generated electricity. I welcome the fact that high quality combined heat and power from coal is given a dispensation for the levy. That seems to show a welcome flexibility. I hope that the Government can extend not only flexibility but good sense to the nuclear industry and nuclear power.
	I support the Government's efforts to back wind power as an energy source with low greenhouse gas emissions. It will be an expensive option with significant issues surrounding reliability and back-up capacity, but that may be a price worth paying to achieve low-carbon technology. The Government would be correct to back wind power as a major source of low emissions energy. Figures published recently by the Royal Academy of Engineering demonstrate that offshore wind power varies between two and three times the cost of new nuclear plant.
	Most objective commentators are clear in their conclusions. If the UK is to achieve its Kyoto commitments, we need a significant nuclear contribution. There is some inconsistency in the way in which the emissions trading scheme will differentially impact against carbon dioxide producers, yet the climate change levy appears to discriminate against an important industry that can contribute to reducing carbon dioxide emissions in our climate.
	Exempting from the climate change levy electricity generation for nuclear power and large-scale hydroelectricity can make a significant contribution to reducing greenhouse gases. It would bring consistency in the Government's approach to the use of the weapons of the climate change levy and the emissions trading standards. I beg to move.

Lord Jenkin of Roding: My Lords, I was happy to add my name to the amendment in the name of the noble Lord, Lord Woolmer of Leeds, and his colleagues. I too regret the absence of the noble Lord, Lord Lea of Crondall. He brings to these debates a mordant wit, which would serve us well on this occasion. One needs a considerable sense of humour to recognise that what the Treasury—it was a Treasury introduction—called a climate change levy was not actually anything of the sort.
	To the ordinary man in the street—I say this with great respect to the noble Lord, Lord Woolmer, who moved the amendment with charm and modesty—the Treasury naming the tax the climate change levy gave the public the view that it was an important step in our efforts to achieve our Kyoto targets for the reduction of greenhouse gases. But it is not. Otherwise, why should there be no dispensation for large-scale hydro, which produces no carbon dioxide, or for nuclear power, which also produces no carbon dioxide? To paraphrase the Treasury, it is an energy tax with a dispensation for renewables as defined.
	That was not the impression given to the public when it was introduced: it was thought that the tax was specifically directed to help achieve our Kyoto targets. It is very much like Humpty-Dumpty—I make words mean what I want them to mean. I am not sure whether Humpty-Dumpty might have been the metaphor over the door of Alastair Campbell.
	The noble Lord, Lord Woolmer, made clear that it is plain dotty to call something a climate change levy and to make the firms—the customers—pay the levy, even though they are buying electricity from generators who generate no carbon dioxide. It is totally and utterly illogical and it is high time that it was put right.
	I am one of those who was persuaded by the report of the Royal Society a year or two ago that we need a carbon tax. I know that that is not everyone's favourite dish, but it would make a great deal more sense than the so-called climate change levy because it is nothing of the sort.
	For those reasons, I was happy to add my name to the amendment. It is an attempt to make sense out of what was a very misleading instrument when it was introduced by the Treasury in 2000. It is an economic instrument which can work in diametrically opposite directions. It may have played its part in driving British Energy to the wall—after all, anyone who bought nuclear power from British Energy had to pay the climate change levy. Why should people choose that rather than go for some of the other sources, on which they might pay less?
	The Government have committed themselves to a strange and tortuous business. The amendment is an extraordinarily valuable effort to try to make some sense of it because manifestly it is a nonsense.

Baroness Miller of Chilthorne Domer: My Lords, we on these Benches would welcome a carbon tax. However, we do not support the amendment because, although rightly it calls for us to debate the issue, it perpetuates the mechanism that the Government have put in place. Perhaps in Committee we should have proposed a carbon tax as a way of achieving the outcomes. Nevertheless, there is an emphasis on the inadequacy of the current mechanism.

Lord Gray of Contin: My Lords, I support the amendment for all the reasons enunciated by the noble Lord, Lord Woolmer of Leeds, and my noble friend Lord Jenkin of Roding. Living as I do in the Highlands of Scotland, and having represented a Highland seat in another place for 13 years, I had a great deal to do with the North of Scotland Hydroelectric Board, as it used to be, over many years. Hydroelectricity and nuclear power have played a significant role in the development of the Highlands of Scotland. The hydroelectricity schemes constructed in the post-war years not only provided useful employment but also ensured electricity for domestic use to some of the most remote parts of the country. Furthermore, by such methods power was and is provided for both domestic and individual purposes in its cleanest form. An important part in helping the Government to achieve their Kyoto obligations is also ensured by the clean methods used by those generators.
	For a long time I have resented the fact that nuclear power has been penalised most unfairly by being subjected to climate change levy. It is totally absurd that those who generate electricity by the most pollution-free methods should have such an imposition thrust upon them.
	Finally, and while on the subject of hydroelectricity, can the Minister confirm that over the next five years Scottish Hydro-Electric will lose its subsidy and the Government will replace it with a levy on all consumers in the area, which will cost those consumers £270 million? I appreciate that I am shooting from the hip. I do not expect the Minister to give me an answer to that tonight; but perhaps in due course he could write to me to confirm whether those figures—which are causing a lot of concern in that part of the country—are correct.
	The hour is getting late and I do not wish to take up more of the House's time. I support the amendment wholeheartedly.

Lord Whitty: My Lords, I do not want to enter the argument about the nuclear contribution to the energy policy at this stage and I will not do so. However, a number of the comments that have been made prompt me to reinforce a point that I was going to make more gently.
	Noble Lords seem to be advocating a substantial change in the tax base, from a climate change levy to a carbon tax levy. That is not appropriate for this Bill; it would be a finance Bill provision, as would the technical change in exemptions from present forms of taxation. That would probably be ruled out of order in another place.
	Nevertheless, we are debating them here, and I will deal with the substantive point because I think noble Lords are being disingenuous.

Lord Gray of Contin: My Lords, the Minister must realise that we are not in another place—we are in the House of Lords. My comments were perfectly in order.

Lord Whitty: My Lords, I did not suggest anything different. All I said was that if we want this piece of legislation to survive then we have to take account of the position in another place as well.
	The point of the renewables levy exemption is to encourage new forms of renewable energy to come forward—such as solar, wind and tidal power—which have the potential to become competitive with other forms of electricity generation as their technology advances. They need help to get to that stage.
	In the case of large-scale hydroelectric power—as in the case of nuclear energy—the technologies are already known and developed. They are already able to compete on a level playing field with the carbon-based or fossil fuel-based energy sectors. They are not disadvantaged relative to other forms of non-renewable generation. If we were to exempt nuclear power from this, far from ending a discrimination against nuclear power we would be providing discrimination in favour of it.
	Whatever the average citizen's view of nuclear power, I doubt whether the noble Lord would find much popular support for that. Exempting nuclear power would not help us meet our Kyoto undertakings; it would not provide a sufficient incentive to bring any new sources of nuclear power into the reckoning; and there are other issues of environmental impact involved.
	The essential point is to bring forward new technologies, not to exempt old ones, whatever their merits or otherwise. There are different views on that matter around this House.

Lord Dixon-Smith: My Lords, I am fascinated. Is the Minister saying that when new technologies such as wind power become established and part of the scenery they will then become eligible to pay the climate change levy? That seems the implication of his remarks. I am sure that the wind industry would be interested to know that.

Lord Whitty: My Lords, no doubt the structure of taxation will change over time. At present, the point of the climate change levy is, first, to tax the use of energy in general, and, secondly, to bring forward new carbon-free technologies. Those new technologies require some additional help; the nuclear industry and the hydroelectric industry do not. For those reasons, they are not exempt. That logic would be completely destroyed by the noble Lord's amendment.

Lord Woolmer of Leeds: My Lords, the Minister speaks about arrangements that may well have been the Government's intention, but the public are genuinely baffled by a climate change levy that appears to be intended to help to reduce carbon dioxide emissions but discriminates against one of the major contributors to clean technology as regards emissions.
	The nuclear issue will not go away; it is a major, important contributor to achieving the Kyoto targets. Members may not be able to say that in the other place, but if we cannot say that frankly in this Chamber, we do a disservice. Virtually no independent commentators deny that nuclear power is a major contributor to achieving Kyoto targets. I sincerely believe that eventually some government of this country will recognise that. I shall support the other attempts to generate power. As many noble Lords know, I chair the Regional Energy Forum, which involves private industry in Yorkshire and Humber. I work month in and month out to try to support new technologies, but that does not blind me to the fact that they alone will not be sufficient.
	Obviously, I am disappointed that the Minister felt that we could treat this only as a money item. It has been a useful debate just to remind the House that the issues still exist. However, we have gone as far as we can today. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.
	Clause 123 [Standard conditions for electricity interconnectors]:

Lord Whitty: moved Amendment No. 201:
	Page 96, line 21, at end insert "or under this Act"
	On Question, amendment agreed to.
	Clause 124 [Consequential amendments of the 1989 Act]:

Lord Davies of Oldham: moved Amendment No. 202:
	Page 96, line 40, leave out subsection (3).

Lord Davies of Oldham: My Lords, in moving this amendment, I shall speak also to Amendments Nos. 221 and 223. Section 11A of the Electricity Act 1989 sets out the procedure for modifying standard electricity licences. In particular, there is a mechanism by which, if Ofgem proposes a modification to a standard electricity licence condition, a certain percentage of licensees must object, otherwise the amendment proposed by Ofgem will be made.
	"Relevant licence holder" is defined in Section 11A(10). To be a relevant licence holder you must hold a licence of the type to be modified, and the condition to be modified must be switched on in your licence. At present, Section 11A refers only to the switching off under Section 33(2) of the Utilities Act. However, there are other ways in which a licence condition may be switched off; for example, Clauses 123 and 114 provide for that. I understand from Ofgem that the terms of a licence may also provide for certain conditions to be switched off. As there are numerous ways to switch off licence conditions, it seems sensible to amend the definition of "relevant licence holder" so that it simply refers to the fact that, if a condition is not in effect, a licensee is not entitled to vote. Our intention is simply to tidy up the drafting of who is a relevant licence holder. I beg to move.

On Question, amendment agreed to.
	Clause 127 [Standard conditions for gas interconnectors]:

Lord Whitty: moved Amendment No. 203:
	Page 99, line 41, at end insert "or under this Act"
	On Question, amendment agreed to.
	Clause 133 [Applications for energy administration orders]:
	[Amendment No. 203A had been withdrawn from the Marshalled List.]

Baroness Miller of Hendon: moved Amendment No. 203AA:
	Page 103, line 40, at end insert—
	"(1A) Subject to subsection (1B) below, before making (or proposing to make) an application in relation to any company under this section, or consenting (or proposing to consent) to such an application by GEMA, the Secretary of State must—
	(a) have consulted the directors of that company, and
	(b) be satisfied that there is no reasonable prospect that the company would otherwise be able to avoid going into administration or insolvent liquidation within the meaning of section 214 of the 1986 Act.
	(1B) Subsection (1A) does not apply—
	(a) if a certificate of the kind mentioned in section 134(3) is to be provided to the court in relation to the application;
	(b) in a case where notice has been given to the Secretary of State under one or more of sections 137 to 141 of a relevant procedure and he considers that the procedure is reasonably likely to come into effect, so far as is necessary to enable him to make an application (or consent to one by GEMA) under this section before the expiry of the notice; or
	(c) so far as is necessary in any other circumstance where the Secretary of State is satisfied that no step open to him or GEMA, other than his making or consenting to an application under this section without delay, would prevent the immediate cessation (or promptly remedy the cessation) by the company of the activities authorised by its relevant licence.
	(1C) For the purposes of subsection (1B), a relevant procedure is one which, by virtue of any of sections 137 to 141, can only be implemented after giving notice of 14 days to the Secretary of State and GEMA, but the enforcement of security over property is only a relevant procedure where the property in question is operationally necessary for the continuity of electricity or gas supply to at least 100,000 premises."

Baroness Miller of Hendon: My Lords, the amendment is a revised version of the proposals made in Grand Committee. It is intended to meet the Government's objections. We are pursuing the principle behind the amendment because there is a major potential problem which needs to be remedied. The aim of the amendment is to prevent the premature appointment of energy administrators. It does so by ensuring that there is proper consultation with the directors of the protected company before such a drastic step is taken.
	It is agreed on all sides that the Secretary of State should satisfy himself that there is no reasonable prospect that the company can avoid going into administration or insolvent liquidation before making the application for the order. That will normally involve consultation with the company.
	The Government put two arguments against this modest and sensible requirement, both equally unsustainable. First, they suggested that if an application to appoint an energy administrator proved to be mistaken or unnecessary in the event, it could easily be withdrawn. That view indicates a total lack of understanding of what happens in the real world of commerce. The intervention of the Secretary of State will unquestionably have a serious effect on the company's credit ratings and the willingness of other concerns to trade with it. It could precipitate insolvency even if the company were solvent at the time the application was made. The need for consultation with the directors is to prevent an ill judged and damaging application.
	The Government's other objection was that there could be reasons of urgency for making the application. Attractive as that argument is on the face of it, it is entirely specious because Clauses 137 to 141 provide for a series of restrictions on the making of compulsory and voluntary winding-up orders, on the making of administration orders, on the appointment of administrators by creditors and, lastly, on the enforcement of securities. Each of those clauses puts the procedure on hold for 14 days, which gives the Secretary of State more than adequate time to consult and reflect on the situation.
	However, to meet that objection, our new subsection (c) provides that in cases of extreme emergency the restrictions can be overridden by the Secretary of State. The amendment gives a clear and unambiguous signal that energy administration will be used only when it is truly the last resort. The amendment as drafted does not restrict that purpose. I urge the Government to accept the amendment. I beg to move.

Lord Jenkin of Roding: My Lords, I reinforce what my noble friend said about the need to live in the real world. I well remember the occasion, because I was at Buckingham Palace at the time, when the news came through that Mr Maxwell had thrown himself off his yacht and was presumed drowned. At that time, I was a non-executive chairman of a company which supplied paper to the Daily Mirror. Within minutes we had put the Daily Mirror on a cash-with-order basis. There was no other way we could ensure that we were going to be paid. That lasted until eventually we were able to resume normal relations. That is what happens. If that were done by one supplier, I have no doubt it would have been done in relation to a great many other people who were concerned with the Maxwell empire. Indeed, one knows what happened to the pensioners.
	Therefore, one has to recognise that if any event triggers a collapse of confidence in a company, the results are instantaneous and cataclysmic. As drafted, the Bill does not recognise that. The amendment goes a long way to meet the concerns which have been voiced.
	I do not deny that at some stage a government may have to step in, as indeed they did with British Energy. As I said in Grand Committee, I think that on the whole that was handled pretty well. However, there needs to be very careful consideration and consultation before that drastic step is taken; otherwise the consequences could be incalculable.

Lord Whitty: My Lords, I understand the concern that is being expressed here about this power. The Secretary of State should not seek a special administration order until she is absolutely clear that that is necessary, which would normally involve talking to the directors of the company concerned and others.
	We also have to live in the real world in the reverse situation where there is such an urgent situation and a need to act and supplies could be cut off were no action to be taken. The Secretary of State surely would be under at least a political and moral duty—we would need to use these powers to make it a legal duty—to act to install a special administration order in those circumstances.
	I recognise that the noble Baroness has sought to meet those circumstances with her three exclusions, which relate, first, to public interest; secondly, to alternative insolvency procedures being under way; and, thirdly, to what she described as the urgency situation. But the amendment does not quite read that way. In any case, if the presumption is that the Secretary of State does not have those powers, acting in extreme emergency situations would be inhibited by the amendment.
	Having said that, I appreciate that the noble Baroness has tried to meet my earlier objections. I also appreciate that the Secretary of State would need, in almost all circumstances but not quite all, to have gone through the procedure set down in this amendment in relation to the directors of the supplier concerned. For the sake of security of supply and the industrial and household consumers dependent on that supply, we must allow the Secretary of State the powers to act in the very special and extreme circumstances that this provision is intended to address.

Baroness Miller of Hendon: My Lords, despite the fact that the Minister speaks very nicely and says that he understands it all, in my opinion he does not understand the crucial point of this amendment, which is important. He is wrong in what he says, but at this time of night I beg leave to withdraw my amendment.

Amendment, by leave, withdrawn.
	Clause 135 [Energy administrators]:
	[Amendment No. 203AB not moved.]
	Clause 145 [Modifications of particular or standard conditions]:
	[Amendment No. 203B not moved.]
	[Amendment No. 203BA not moved.]
	Clause 149 [Appeals to the Competition Commission]:

Lord Kingsland: moved Amendment No. 203C:
	Page 115, line 12, leave out "whose interests are materially affected by it" and insert "with a sufficient interest in that decision"

Lord Kingsland: My Lords, in moving Amendment No. 203C, I shall speak also to a number of other amendments. I hope that your Lordships will forgive me if I begin with Amendment No. 208.
	In Grand Committee, the noble Lord, Lord Triesman, said that it was the intent of the Government to create a "tailored approach" to rights of appeal. As I understood him, he meant that the Bill was designed to establish a right of appeal that was something less than a full re-hearing but more than judicial review.
	More precisely, the noble Lord said that the purpose of the Bill was to require the Competition Commission, as the body hearing appeals, to
	"adopt the same approach as would, for example, the Court of Appeal in hearing an appeal against a decision of a lower court".—[Official Report, 1/3/04; col. GC 162.]
	We believe that the Government have met that undertaking in their amendment at Report stage. The amendment clearly entitles the Competition Commission to re-assess the factual basis on which weights were accorded, and then compared, by Ofgem, and then to make its own independent assessment.
	Your Lordships will be relieved to know that I shall turn now to the other amendments in the group in the order in which they are set out. As your Lordships will recall, Amendments Nos. 203C and 203D aim to ensure that persons with a "sufficient interest" in the relevant decision will be entitled to appeal against it rather than only those persons who are "materially affected" by the decision.
	The test of sufficient interest has been elaborated by case law and has, on the whole, been interpreted generously. When we raised this issue in Grand Committee, the noble Lord, Lord Triesman, said that he found it difficult to imagine what additional parties we would hope to enable to appeal under a more generous test of eligibility. But our concern was actually the reverse of that. Our concern was that, on the test of material effect, there was no guarantee that all of the parties to an industry code would be equally entitled to appeal in relation to a particular Ofgem decision.
	After all, a decision may be perceived as thoroughly bad in principle by those with a sufficient interest in it, even though it might not materially affect them in the accepted sense of these words. On the test used by the Bill as it stands, they would not be able to appeal against any such decision that they believed was wrong and should be challenged. This cannot be right.
	The legal implications of using the material effect test are also unclear. But for these provisions in the Bill, those parties with a sufficient interest in a decision would be entitled to bring an action for judicial review. Will they still have that right? In other words, if they fail the material effect test to bring an appeal to the Competition Commission, can they go to court and show, instead, that they, none the less, pass the easier test of sufficient interest, entitling them to judicial review? To create the potential for two legal processes that operate in parallel in relation to exactly the same decisions simply cannot be sensible.
	Alternatively, will the legal effect of the Bill be, though without any express intention to this effect, that the rights of those with sufficient interest are ousted by the existence of an alternative remedy from which they have been excluded? Might the courts decline judicial review on the basis that Parliament has provided an alternative that it has not seen fit to make available to the sufficient interest applicant? I have not seen any justification for thus disfranchising members of the industry in relation to their existing rights to a review. On the contrary, the stated intention of the appeals provisions in the Bill is to enhance rather than to diminish those rights.
	As a matter of law, I do not believe that it can be clear how the courts would approach these questions. There is little precedent to guide us. Neither of the two possible options seems in any way attractive. The use of a novel material interest test in the Bill creates more problems than it can possibly solve. We believe strongly that it should be replaced by the concept of sufficient interest, with which the industry and the courts are already familiar.
	By contrast, the amendments proposed by the noble Lord, Lord Whitty—Amendments Nos. 204, 206, and 207—give me reason to thank him very much indeed for reflecting further on the 10-day limit in the Bill and seeing fit to extend it to 15 days. We would have preferred 20 days; but we recognise that the Government have given ground in this area in a way that is sensible, and we are content with a solution that is thought to be the optimum one.
	Amendment No. 205A seeks to replicate a deletion that the Government intend to make in Schedule 22 and is an amendment that the noble Lord, Lord Whitty, has made in Amendment No. 205. The Government rightly want to leave out paragraph 1(12). We agree with that. Under some of the earlier provisions of paragraph 1, an authorised member of the Competition Commission, not the commission itself, is able to decide whether to grant permission to bring an appeal, and if so, whether that permission is to be subject to conditions. Such conditions, as I understand it, can be substantive as well as procedural.
	Sub-paragraph (12) would give the authorised member a third discretion entitling him to modify subsequently those conditions,
	"in such a manner as he thinks fit".
	It is wholly unclear why this provision is required or why it should be drafted in such wide and unfettered terms. That is presumably why the Government now seek to delete it.
	However, the same formula, providing for the same third layer of discretion, is also to be found at sub-paragraph (10) of paragraph 2 of the schedule in relation to the power of an authorised member to direct that party to be added to appeals. Having given the direction that a party can be added to an appeal and attach conditions, which may be substantive or procedural, to the direction, the member can subsequently return to the matter and modify the conditions,
	"in such a manner as he thinks fit".
	The same objections apply to this sub-paragraph as to the sub-paragraph which the Government have so wisely sought to delete. In my submission, the Government should follow their own analysis to its logical conclusion and delete both provisions. Our amendment would achieve this. I beg to move.

Lord Whitty: My Lords, I am grateful to the noble Lord, Lord Kingsland, for not only welcoming all of our amendments in this section but also for speaking to them more clearly and more adequately than my text was likely to do. I endorse everything he said on that. Moreover, as to the point he made on Amendment No. 205A, I agree that it follows the same logic as that in Amendment No. 205 and would delete an unnecessarily wide power in rather undefined circumstances. I will therefore accept his Amendment No. 205A.
	That is as far as the good news goes. I cannot accept Amendments Nos. 203C and 203D. They relate to the difference between "materially affected" and "sufficient interest". The whole point of opposing previously the dilution implicit in the change of description is that we should have appeals only from those who are materially affected by this. More than 200 code modifications are made in a year and the possibility of having a flood of appeals from people who are not very directly affected by the change is one that we would wish to avoid.
	Moreover, during the consultation last year, the vast majority of correspondents were also concerned about that. Some of the major companies involved have made plain that they believe the current balance is right and that they would not wish to weaken the test. There seems no real justification for allowing appeals from people who are less than materially affected, which is the import of the noble Lord's redrafting.
	As to his point about those who had sufficient interest but did not pass the materially affected hurdle and whether they would still have recourse to judicial review, the answer is that they would provided that they could satisfy the usual tests for such a claim. So there is no exclusion of those whom the noble Lord wishes to bring into the main appeals process from going for judicial review. We believe that that is a sufficient safeguard for them. To accept the noble Lord's amendment would widen the scope for others to appeal and I hope that he will not pursue it.

Lord Kingsland: My Lords, I am most grateful to the noble Lord for his endorsement of a number of our amendments. It would be churlish of me to make too much fuss about Amendments Nos. 203C and 203D, particularly as the noble Lord also accepts that those with a sufficient interest would still have recourse to judicial review.
	Nevertheless, between now and Third Reading I would like to reflect on what he has said. I hope that, if I bring this amendment back at Third Reading—and it would be the only amendment in my area that I would bring back—he will not think the worse of me for doing so. I understand his point of view but my initial thinking is that my amendment would be better enshrined in the Bill. I shall go away, think about his 200 potential complainants, and make an assessment before we table our amendments in a few days' time. Meanwhile, I beg leave to withdraw Amendment No. 203C, although I think we will come to an amendment later in this group that I shall move.

Amendment, by leave, withdrawn.
	[Amendment No. 203D not moved.]
	Schedule 22 [Procedure for appeals under section 149]:

Lord Whitty: moved Amendments Nos. 204 and 205:
	Page 239, line 2, leave out "ten" and insert "fifteen"
	Page 239, line 30, leave out sub-paragraph (12).
	On Question, amendments agreed to.

Lord Kingsland: moved Amendment No. 205A:
	Page 240, line 41, leave out sub-paragraph (10).
	On Question, amendment agreed to.

Lord Whitty: moved Amendments Nos. 206 and 207:
	Page 241, line 29, leave out "twenty" and insert "fifteen"
	Page 241, line 33, leave out "twenty" and insert "fifteen"
	On Question, amendments agreed to.
	Clause 151 [Determination of appeals]:

Lord Whitty: moved Amendment No. 208:
	Page 116, line 25, at end insert—
	"( ) that GEMA failed to give the appropriate weight to one or more of those matters or purposes;"
	On Question, amendment agreed to.
	[Amendment No. 208ZA had been withdrawn from the Marshalled List.]
	Clause 152 [Modifications of standard conditions for funding appeals]:

Lord Whitty: moved Amendments Nos. 208A to 208C:
	Page 117, line 20, after "so" insert—
	"(a)" Page 117, line 21, leave out "he may make" and insert "or
	"(b) in relation to references to the Competition Commission under section 24 of the Gas Act 1986 (c. 44) or section 12 of the 1989 Act (modification references),
	he may make licence modifications falling within subsection (1A).
	(1A) Those licence modifications are—" Page 117, line 27, at end insert—
	"( ) Where the standard conditions of gas or electricity licences contain provision authorising the imposition of licence charges in respect of costs incurred by the Competition Commission in connection with a reference mentioned in subsection (1)(b)—
	(a) the Competition Commission shall have power, on such a reference, to give directions to GEMA about the manner in which the Competition Commission's costs in connection with that reference are to be recovered by means of such charges; and
	(b) GEMA must comply with any such directions."
	On Question, amendments agreed to.
	[Amendment No. 208CA not moved.]

Lord Whitty: moved Amendment No. 208D:
	Transpose Clause 152 to after Clause 153.
	On Question, amendment agreed to.

Lord Davies of Oldham: moved Amendment No. 209:
	After Clause 153, insert the following new clause—
	"DUTY TO HAVE REGARD TO BEST REGULATORY PRACTICE
	In each of section 4AA of the Gas Act 1986 and section 3A of the 1989 Act (principal objective and general duties), after subsection (5) insert—
	"(5A) In carrying out their respective functions under this Part in accordance with the preceding provisions of this section the Secretary of State and the Authority must each have regard to—
	(a) the principles under which regulatory activities should be transparent, accountable, proportionate, consistent and targeted only at cases in which action is needed; and
	(b) any other principles appearing to him or, as the case may be, it to represent the best regulatory practice.""

Lord Davies of Oldham: On behalf of my noble friend, I beg to move Amendment No. 209 and to speak briefly to Amendment No. 209ZZA. The government amendment formalises in statute the commitment that Ofgem has already made to be guided by the principles of best regulatory practice. It follows similar provisions placed on Ofcom and Ofwat in the Communications Act 2003 and the Water Industry Act 1991 respectively, ensuring consistency among regulators.
	We oppose the amendment in the name of the noble Lord, Lord Jenkin. The proposal is to use amendments to the Gas Act 1986 and the Electricity Act 1989 as a means of changing the terms of the Petroleum Act 1998. We do not think that this is the right way to proceed. The Petroleum Act covers regulation of the offshore oil and gas industry. This industry is not covered by the Gas Act or the Electricity Act and it is regulated by the Secretary of State and not by Ofgem. That is why we are pressing the government amendment. We hope that the noble Lord will feel able to withdraw his amendment.

Lord Jenkin of Roding: moved, as an amendment to Amendment No. 209, Amendment No. 209ZZA:
	Line 12, at end insert—
	"( ) The provisions of subsection (5A) shall apply to the functions of the Secretary of State exercised under section 3 of the Petroleum Act 1998 (c. 17) (licences to search and bore for and get petroleum).""

Lord Jenkin of Roding: My Lords, that is very impertinent. I find it a very strange proceeding that the Minister should reply to my amendment before I have even said a single word about it. That may be in his brief but, even though it is half-past ten at night, I think that I am entitled to the courtesy of being able to make my case and then he can answer it if he does not like it.
	The case is a very short one. When we debated the question of additional powers for Ofgem to secure information from offshore generators, we had two amendments. One was for electricity and one was for gas. The noble Lord, Lord Davies of Oldham, said that the electricity one was unnecessary because it was already in the Act and Ofgem already had that power. However, he then went on, for over two columns, to explain why it was quite impossible that Ofgem should have the power to get information about offshore gas. The reason was what he has just said: that offshore gas is regulated by the department.
	We then came to the amendment, which related to principles of best regulatory practice, where all was sweetness and light. The amendment was moved and the noble Lord, Lord Triesman, said,
	"it gives me particular pleasure to say that we are happy to consider this amendment".—[Official Report, 2/3/04; col. GC 204.]
	Amendment No. 209 is a perfectly honourable fulfilment of that pledge. However, we are still left with the position that the Government are very happy to impose best regulatory practice on Ofgem as a regulator but, where they have proudly said that they will not have Ofgem interfering with offshore gas because that is regulated by the department, I understand that he is not prepared to have the best regulatory practice applied to the department. Why ever not? If he says, as he did in the debate about the powers of Ofgem, that the department was regulating offshore gas and therefore it was quite wrong that the powers should go to Ofgem, then why on earth is the department not subject to the best regulatory practice?
	The amendment which I have put down would achieve precisely that. I hope that the Minister will give it rather more thought than he appears to have done so far. What is good enough for the goose is also good enough for the gander. If the noble Lord, Lord Davies, does not like the description of a gander, I am sure that I could find another metaphor. It is regulation that matters, not who does it. I hope that this amendment may prove in the end to be acceptable. I beg to move.

Baroness Byford: My Lords, I rise briefly to support my noble friend Lord Jenkin. It does seem very strange that a certain set of rules applies to Ofgem and a different set of rules applies to the department.
	The noble Lord, Lord Davies, may have slightly misunderstood and may have spoken in advance inadvertently. I am sure he meant no discourtesy, but I would like him to clarify the point that has been raised because it is clearly unfair, and would be seen to be unfair by people having to operate it outside the Chamber.

Lord Davies of Oldham: My Lords, I apologise for having presumed too much. The noble Lord, Lord Jenkin, has quite rightly deployed his case, which deserves an answer. We were seeking to be positive with our amendment, and I thought that it would be to the benefit of the House that I indicated the likely Government position with regard to the amendment grouped with the amendment that I was moving. I quite understand that the noble Lord thought that I was pre-empting an argument, which he then deployed with his usual force and accuracy.
	The point I sought to emphasise was that this seems to be the wrong Bill to carry the amendments that the noble Lord has identified. We would be prepared to consider such an amendment if it were in the form of an amendment to the Petroleum Act, which I think was the burden of his argument about the regulatory regime that is necessary. However, we did not and do not think that it is appropriate in the way that it is presently tabled.
	I was merely seeking to identify that, while at the same time, with the Government amendment, fulfilling a commitment we had made earlier in the debate on the Bill. It is therefore on that basis that I commend the government amendment.

Lord Jenkin of Roding: My Lords, I heard what the Minister said. As he said that he is prepared to introduce an amendment to the Petroleum Act, it would be silly of me to press this amendment to the Bill. I beg leave to withdraw the amendment.

Amendment No. 209ZZA, as an amendment to Amendment No. 209, by leave, withdrawn.
	On Question, Amendment No. 209 agreed to.

Baroness Miller of Hendon: moved Amendment No. 209ZA:
	After Clause 154, insert the following new clause—
	"COMPLIANCE WITH SECTIONS 32 TO 32C OF THE 1989 ACT
	(1) In section 25 of the 1989 Act (orders for securing compliance), in the definition of "relevant requirement" in subsection (8), for "32C" substitute "32D".
	(2) After section 32C of the 1989 Act, insert—
	"32D Prevention and remedying of default in compliance with sections 32 to 32C
	(1) An order under section 32 may provide that an electricity supplier must pay such a sum to the Authority, corresponding to the supply of a given amount of electricity by the supplier in a particular period, as may be—
	(a) estimated by the Authority as necessary to make good in aggregate any unrecovered default in the payments referred to in section 32C(1) by other suppliers in previous periods; and
	(b) notified by the Authority to the supplier not less than eight months before the start of that period.
	(2) Any sums received under subscription (1) shall be paid by the Authority to electricity suppliers in accordance with a system of allocation specified in the order.
	(3) The system of allocation specified in the order may provide for payments to specified categories of electricity supplier only.
	(4) The order may also make provision—
	(a) requiring an electricity supplier periodically during a period to deposit with the Authority evidence of the kind described in section 32(3) or payments under section 32C, in either case estimated by the supplier as representing the proportion specified in the order of the amounts attributable to so much of the period as has elapsed;
	(b) enabling account to be taken by the supplier, in preparing its estimate under paragraph (a), of the likely level of payments to be due to it under subsection 32C(3) in relation to any evidence deposited;
	(c) requiring the supplier to comply with a request from the Authority to disclose the basis of its estimate under paragraph (a) at the time and in the manner required by the Authority and, if the Authority is not satisfied as to the reasonableness of the supplier's estimate, enabling the Authority to direct the supplier to use an estimate provided by the Authority;
	(d) for the payment by the Authority of interest due to the supplier in consequence of any sums deposited by the supplier under paragraph (a); and
	(e) enabling the Authority to accept such other forms of security as may be described in the order in substitution for all or part of the evidence or payment required under paragraph (a), and to determine the acceptability of any such security proposed by a supplier.
	(5) Different proportions may be specified under subsection (4)(a) in relation to different stages within the period.
	(6) Where the Secretary of State is satisfied that it would be proportionate and cost effective to do so, the order may also make provision—
	(a) as to the form and extent of any further measures which a supplier is to take for the purpose of securing payment to the Authority of sums which may become payable for the purposes of section 32C(1); and
	(b) enabling the Authority to determine the acceptability of any measures which a supplier proposes to take or has taken for that purpose.
	(7) This section is without prejudice to the enforcement powers available to the Authority in relation to any provision of section 32 to 32D that is a relevant requirement within the meaning of section 25(8)."

Baroness Miller of Hendon: My Lords, this is a long and complex amendment, dealing with a very difficult but important problem. So although it is rather late at night, I shall have to move it. However, I shall try to keep my remarks to the minimum of the general principles involved and not to the itemised details.
	The problem, which was in any case an incident waiting to happen, was highlighted by the financial failure of TXU UK to pay its huge renewables obligations. This default distorted the market by creating a very large shortfall in the fund. Those adversely affected had no means to control, or even to assess, the financial risk to which they were exposed. What is happening now is that the market is itself pricing a credit risk into the ROC price. This in turn means that some of the money consumers are paying for electricity is not used for that purpose. It is being used instead as insurance against future risks. That is an inefficient use of the money and will undermine the objective of bringing renewables into the power equation.
	One suggestion made by the Minister during our discussions was offsetting buy-out payments against ROC liabilities. Another suggestion was the surcharging of late payments. I also understood that the Government would be bringing forward a scheme to allow for reconciliation of the ROC fund more frequently than annually to reduce the credit risk. So far as they go, they are of some help, especially when it is only a case of delayed payments, but they have little or no effect on an actual insolvency, when the money is lost and gone for ever. It was very interesting to hear what the noble Lord said when speaking to Amendment No. 190B.
	There are in fact two practical ways to resolve the problem. One is for there to be a form of securitisation whereby those who are liable to provide money to the fund have to be bonded or give some other form of security. Plan "B" is to create a mutual fund, rather in the form of the one operated by travel businesses or the Law Society's compensation fund. Either route will involve some cost that will, inevitably, be passed on to customers.
	Different participants in the industry have differing opinions as to which of these two methods is to be preferred, and some even favour a combination of the two. As the cost of the two will, as I have already pointed out, be passed on in the end to the customer, whether the private household or industry, it is up to the Government to produce a solution to the problem caused by the existence of ROCs. It is against that background that this amendment has been drafted.
	The Government often complain that amendments are "too prescriptive"—although of course I know that the Minister could not possibly say that about this one, which offers complete flexibility. It enables the Government to consult on the appropriate response to this admittedly difficult issue. It provides a number of options, the desirability of which can be assessed over the coming months. I am given to understand that the amendment has broad support within the industry, although, as I said, with differing views on whether one or both options should be adopted.
	I have already mentioned the adverse effect on the renewables market caused by the TXU default. There is the possibility—indeed, I would submit the distinct likelihood—that this could occur again, more than once, in the future, and even on a bigger scale. The silver lining to the TXU default is that it occurred at a time when this Bill was on the legislative stocks, and the Government do not have to find parliamentary time to secure a remedy to a major problem. To do nothing, as is the current situation in the absence of remedial proposals from the Government, is not an option, because the loss caused by a default will inevitably find its way down the chain to the ultimate consumer.
	The measures proposed in this amendment create a rational, and as I said, a truly flexible framework to underpin the Government's policy on renewables. I beg to move.

Lord Whitty: My Lords, the noble Baroness is addressing a difficult and complex situation with quite a complex and difficult amendment. I understand the motivation for it but it does not resolve the issue. It is headed "prevention and remedying", but I am not sure that prevention is possible by legislative means. The remedy here would not be an easy one to fit in with the rest of the policy. Indeed the obligation on the rest of the suppliers to meet the shortfall would eventually be paid for by the consumers. As the noble Baroness was right to acknowledge, Amendment No. 190B and other amendments indicated how we deal with the short-term shortfall. The question of insolvency being borne by the other suppliers and the way in which the noble Baroness sets out Ofgem to correct that would lead to enormous complications. For example, the amendment requires Ofgem to estimate the degree of shortfall and therefore the degree of cost on the other suppliers eight months in advance of the period—that will lead to very substantial disputes about the amounts both post-facto and pre-facto—if that is the word. Clearly estimation in these circumstances, as in the TXU case, as proven, are somewhat difficult in the early stages of the knock-on effects of the bankruptcy.
	The effects of this would be therefore to increase uncertainty rather than to decrease uncertainty, certainly for the suppliers. Even if proved effective, the effect would be to require electricity suppliers to make regular payments to cover their share after renewables obligation, or to make payments in accordance with directions from Ofgem. The cost of that would inevitably fall on the consumers.
	While this is a difficult area, I do not think that giving these powers to Ofgem to recover the money would make the imposition on the individual alternative suppliers fall in this way; it would not help the security nor certainty of the situation. I therefore could not accept these amendments. The amendments that we tabled earlier go some way to meeting most shortfalls, but I recognise that there is still a problem on an insolvency situation. To operate in this way would not help that situation. It certainly would not help to avoid that situation.

Baroness Miller of Hendon: My Lords, while I will consider very carefully what the Minister said—and clearly I will have to come back to it—I do say that there is a problem here that has to be solved. It is not for the Opposition to keep coming up with alternatives, it is for the Government to get a grip on this position, to consult and do what is necessary. I put forward a much firmer amendment in Committee, where I again argued two alternatives. The noble Lord, Lord Davies of Oldham, the Minister concerned, said how fair I was when I argued it both ways at once—if it is possible to do that.
	In this case we took more advice from the suppliers and it is my understanding that the industry would be happy with either of these, or a combination of both, but they are not absolutely confirmed in their minds as to which one they want. It is for the Government, not for us, not to simply say that it is too complicated and cannot be done. I have said that I will consider it and no doubt come back at Third Reading, but in the mean time if the Government are not happy with my doing that, then I suggest that they get a move on and do something themselves. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.
	[Amendment No. 209ZB not moved.]

Lord Whitty: moved Amendment No. 209A:
	After Clause 155, insert the following new clause—
	"PREPAYMENT METERS
	(1) In Schedule 2B to the Gas Act 1986 (c. 44) (which sets out the gas code), for paragraph 6A substitute—
	"6A (1) A pre-payment meter installed by an authorised supplier through which a consumer takes his supply of gas shall not be used to recover a sum unless—
	(a) the sum is owed to an authorised supplier in respect of the supply of gas to the premises on which the meter is installed or in respect of the provision of the meter; or
	(b) the recovery of the sum in that manner is permitted by both—
	(i) regulations made by the Authority; and
	(ii) an agreement falling within sub-paragraph (2) below between the consumer and the person to whom the sum is owed.
	(2) An agreement falls within this sub-paragraph if—
	(a) the person to whom the sum is owed is a person who is authorised by regulations made by the Authority to enter into agreements falling within this sub-paragraph;
	(b) the agreement permits that person to use the meter in question to recover such sums as may be specified in or determined under the agreement; and
	(c) the agreement complies with the requirements specified for the purposes of this sub-paragraph by regulations made by the Authority.
	(3) The sums that regulations under this paragraph may permit the recovery of through a pre-payment meter include—
	(a) sums owed to a person other than an authorised supplier;
	(b) sums owed in respect of premises other than the premises on which the meter is installed;
	(c) sums owed in respect of matters other than the supply of gas.
	(4) Before making regulations under this paragraph the Authority must consult—
	(a) the Council;
	(b) all authorised suppliers;
	(c) such other persons as the Authority considers appropriate.
	(5) The approval of the Secretary of State is required for the making of regulations under this paragraph."
	(2) In paragraph 12 of Schedule 7 to the 1989 Act (use of pre-payment meters), for sub-paragraph (2) substitute—
	"(2) A pre-payment meter installed by an authorised supplier through which a customer of such a supplier takes his supply of electricity shall not be used to recover a sum unless—
	(a) the sum is owed to an authorised supplier in respect of the supply of electricity to the premises on which the meter is installed or in respect of the provision of the meter; or
	(b) the recovery of the sum in that manner is permitted by both—
	(i) regulations; and
	(ii) an agreement falling within sub-paragraph (3) below between the customer and the person to whom the sum is owed.
	(3) An agreement falls within this sub-paragraph if—
	(a) the person to whom the sum is owed is a person who is authorised by regulations to enter into agreements falling within this sub-paragraph;
	(b) the agreement permits that person to use the meter in question to recover such sums as may be specified in or determined under the agreement; and
	(c) the agreement complies with the requirements specified for the purposes of this sub-paragraph by regulations.
	(4) The sums that regulations under this paragraph may permit the recovery of through a pre-payment meter include—
	(a) sums owed to a person other than an authorised supplier;
	(b) sums owed in respect of premises other than the premises on which the meter is installed;
	(c) sums owed in respect of matters other than the supply of electricity.
	(5) Before making regulations under this paragraph the Authority must consult—
	(a) the Council;
	(b) all authorised suppliers;
	(c) such other persons as the Authority considers appropriate.""

Lord Whitty: My Lords, this amendment relates to pre-payment meters. We have indicated that we support in principle the terms of an amendment made by the noble Lord, Lord Jenkin. Although we have not entirely followed the terms of his suggestion, it meets the same issue; there are a number of safeguards built in—in particular Ofgem must consult Energywatch and the consumer must agree to any debt collection arrangement rather than it being imposed by the supplier. The amendment meets the main terms of what was suggested. Obviously, on the next amendment, I shall listen to what noble Lords suggest in terms of alternatives or elaborations, but I hope that they can accept the amendment in the mean time. I beg to move.

Lord Jenkin of Roding: moved, as an amendment to Amendment No. 209A, Amendment No. 209B:
	Leave out lines 27 to 33.

Lord Jenkin of Roding: My Lords, I say straightaway that the Government have of course gone a long way to meet the requests made in Grand Committee. I tabled the amendments because I am ashamed to say that I did not understand proposed new paragraph 6A(3) of Schedule 2B to the Gas Act 1986 or proposed new paragraph 12(4) of Schedule 7 to the 1989 Act. They are drafted in what one has come to recognise as the somewhat convoluted way of parliamentary counsel. I hope that the Minister might be persuaded to explain in clear and simple language what they mean.
	Amendment No. 209D tries to spell out, in clear and simple language, what we were being asked by the National Consumer Council, I think, before Grand Committee; namely, that suppliers, who have both pre-payment and normal credit-meter customers, are able to offer to the pre-payment customers the same packages for their supply as are offered to the normal credit customers. I am told that the Minister's amendment achieves that. I would be grateful for a clear statement from the Minister that that is indeed the purpose of his new clause, and that what I wish can be achieved, so that in future those who go for pre-payment meters will not be disadvantaged by not being able to take up offers made to those who use credit-payment meters. That is the purpose of the amendment.
	If the Minister can give us those clear undertakings, I hope that there will be no need for me to press the amendment. I beg to move.

Lord Whitty: My Lords, if the first two of the noble Lord's amendments were agreed to, it would reduce the flexibility required. As I understand it, proposed new paragraph 6A(2) of Schedule 2B to the Gas Act 1986 and proposed new paragraph 12(4) of Schedule 7 to the 1989 Act, which would be deleted, allow us to enable suppliers not to apply a differential between pre-payment and standard tariff, and therefore not to disadvantage pre-payment customers, or indeed vice versa. That is part of the intention of the wording of those two provisions. If it is not clear, it may be useful for us to spell that out in writing to the noble Lord, but it was certainly the intention of my amendment.

Lord Jenkin of Roding: My Lords, in the circumstances, it would be very helpful if the Minister could write to me. Then I could pass that on to Energywatch and others who have been concerned on the point, and it will be in the public domain. In the mean time, I beg leave to withdraw the amendment.

Amendment No. 209B, as an amendment to Amendment No. 209A, by leave, withdrawn.
	[Amendments Nos. 209C and 209D, as amendments to Amendment No. 209A, not moved.]
	On Question, amendment agreed to.

Lord Williams of Elvel: moved Amendment No. 210:
	Before Clause 156, insert the following new clause—
	"CONSENTS UNDER SECTIONS 36 AND 37 OF THE 1989 ACT: PROCEDURE IN WALES
	In Schedule 8 to the 1989 Act (procedure for consents under sections 36 and 37 relating to the installation of generating stations and electric lines), after the words "the Secretary of State" on each occasion where they occur, is inserted "or, in the case of Wales, the National Assembly for Wales"."

Lord Williams of Elvel: My Lords, the amendment stands in my name and those of the noble Lord, Lord Livsey of Talgarth, and the noble Viscount, Lord Tenby. It may be for the convenience of the House if I also speak to Amendments Nos. 211 to 216, all of which are consequential on Amendment No. 210.
	I shall deal quickly with the "minor" amendments we discussed in Grand Committee. This is a simple planning matter—when an inspector is appointed in Wales, the National Assembly for Wales should have the power to appoint that inspector. I made that case in Grand Committee and I hope that it stands. I received some encouraging noises from my noble friend in Grand Committee, but I hope that this evening I may receive more.
	Amendment No. 210 is rather more than a planning matter, although it comes under planning legislation. This has nothing to do with wind farms, as such; it is to do with large generating stations. Sections 36 and 37 of the Electricity Act 1989, to which the amendment refers, deal respectively with "a generating station . . . [of] 50 megawatts" or greater installation capacity and high voltage overhead lines. Although I said that my amendment had nothing to do with wind farms—and I am not trying to persuade anyone that the National Assembly for Wales should take a view on wind farms—I am concerned with devolution. If the Government want devolution to Wales they have to wish the means for that. One of the means for devolution is to allow the National Assembly to take whatever decision it feels fit, without having to refer to Whitehall, on any generating station of large capacity or with high voltage overhead lines in Wales. That would seem to be a reasonable procedure.
	I shall not go through the existing position, because it is late at night. However, I shall say quickly that if a large generating station is proposed in Wales and if the local authority in question approves it and is challenged, the National Assembly for Wales has no locus whatever. Therefore, it cannot call the application in, it is not a statutory consultee and it has no position. That is wrong and is contrary to the principle of devolution.
	My noble friend made some encouraging noises in Grand Committee. I hope that the noises will be rather more encouraging this evening, because it is a matter that the Government should and, I hope will, support. It is not enough just to have a tripartite meeting of officials who might report towards the end of the year or in the Greek Calends. I hope that my noble friend will assure me that the matter is urgent, sensible and should be supported. I beg to move.

Baroness Miller of Hendon: My Lords, it is clear that the noble Lord, Lord Williams of Elvel, feels strongly about these matters and he moved his amendment well, although, as he said, not in too much depth at this time of night. It is an interesting idea, but we consider that, although he says he is concerned about devolution, the matter should be considered in the light of devolution generally and not specifically, as his amendment suggests. It should not be a by-product of another Bill—in other words, one has to deal with devolution properly. I understand that the Richards report will be published in the next few days, possibly before Third Reading. The noble Lord may then wish to say something. I do not know if that is the case, but I have set out our position.

Lord Davies of Oldham: My Lords, the noble Baroness has introduced an important consideration and I shall respond to my noble friend along those lines. I congratulate him, both for the force with which he presented this issue in Committee and the eloquent way with which he has moved the amendment. It is an important issue and he gave us plenty of warning about the depth of feeling, not only in Wales, but also that he has on the matter. He deserves a proper response from this Bench and I hope that he will consider it to be constructive.
	The call from Wales on the issue has been heard. We are looking into the matter, but it is not something that we can decide overnight. The issue has to be dealt with in a considered way, as the noble Baroness, Lady Miller, made clear. I make no apology that some of the points I am making are the same that I made in Grand Committee, because they retain their relevance.
	My noble friend is right that the great concern about these issues in Wales followed from the Cefn Croes onshore wind farm decision, which caused such concern that a working group has been set up to consider the crucial question of the handling of consent for power stations in Wales. I am at one with him when we emphasise that this is not just about wind farms but about power stations of a certain size in Wales. A working group of officials from the Wales Office, the National Assembly and the Department of Trade and Industry has completed much of the fact finding, including a visit to the Scottish Executive earlier this year to draw on their experience in exercising such powers.
	I mentioned in Grand Committee that there is much to be learned from the Scottish experience because they have had to address themselves to these matters. There is already a perfectly valid vehicle to consider the case for change. The Assembly staff in the working group have asked about other powers the DTI exercises in respect of energy and infrastructure in Wales; for instance, gas infrastructure functions. The DTI is joint determiner of electricity and gas industry planning appeals.
	I therefore do not think it makes sense to put forward piecemeal amendments to a problem that requires a package to be constructed to address these significant and wide-ranging issues. If legislative change is decided on, the Bill should not be the vehicle. A respectable mechanism exists for the transfer of functions under the Government of Wales Act, which is the proper way in which we would effect such a change. If for some reason that was not felt to be the appropriate vehicle—I am sure that it is—the working group could produce another recommendation.
	The National Assembly is an important expression of Welsh concern about these issues. We respect its role. But it is not the only stakeholder with an interest. Other departments in Whitehall are concerned about the matter. The industry has great concerns and local planning authorities also have an interest. We cannot produce a piecemeal solution to a general problem.
	I am grateful to my noble friend for having highlighted the issue. It needed to be aired against a background where we all recognised the concern in Wales on those issues. I want to reassure him that we have a mechanism for addressing those points. They are inevitably being pressed by all those in Wales concerned about the matter. I hope that he recognises that the Bill is not the vehicle for dealing with it, but having highlighted the matter he has advanced the cause that he has expressed in such an articulate fashion. I hope he will feel that he has made sufficient progress to withdraw his amendment.

Lord Williams of Elvel: My Lords, it is late at night. I do not want to press my noble friend. But it is a matter of considerable urgency, and I hope it will not be kicked into touch with a group of officials chuntering away and relying on existing legislation. It is an urgent problem in Wales. I hope that my noble friend will pass that message to my noble friend Lord Whitty and to other noble friends in different departments who may be involved in procedure.
	In response to a question in the Welsh Assembly, tabled by Mr Nicholas Bourne, who happens to be the Leader of the Conservative Party in Wales and also one of my constituency Assembly Members, it was said by the person responsible that this was a matter for the UK Cabinet committee on devolution policy. I always took the view that it was a matter for Parliament and not necessarily for the Government to decide what they want to do. It is for Parliament to legislate in one form or another what happens and I hope that my noble friend will convey that message.
	I raise the issue in the context of this Bill because, after all, we have been talking about amendments to the 1989 Act. I see no reason why there should not be an amendment to the 1989 Act if Parliament so wishes. I do not want to press the matter because it is late at night and we all want to go home. Therefore, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.
	Clause 156 [Additional inspectors]:
	[Amendments Nos. 211 to 216 not moved.]

Lord Davies of Oldham: My Lords, I beg to move that further consideration on Report be now adjourned.

Moved accordingly, and, on Question, Motion agreed to.

University of Manchester Bill [HL]

The Examiner's certificate that further Standing Orders had been complied with was ordered to lie on the Table and the Bill was committed to an Unopposed Bill Committee.

European Parliamentary and Local Elections (Pilots) Bill

Bill returned from the Commons with a Lords amendment to a Commons amendment disagreed to with a reason for such disagreement; the reason was ordered to be printed.
	House adjourned at one minute past eleven o'clock.